UNITED STATES: DTCC to Launch Platform to Digitalize and Modernize Private Markets

Wednesday November 10 2021

On 9^th November 2021, The Depository Trust & Clearing Corporation (DTCC) announced a new platform to streamline the issuance, transfer, and servicing of private market securities. As described in a new industry report, “Digital Securities Management: Bringing Private Markets Infrastructure Into the 21st Century”, DTCC’s new Digital Securities Management (DSM) platform will, subject to regulatory approval, for the first time, provide an industry-wide solution that offers common market infrastructure and standards across private markets. The platform represents the next major milestone in DTCC’s efforts to bring automation, standardization and efficiency to the private markets, building upon its Project Whitney case study. 

DSM will offer access to participants through both central and distributed infrastructure, leveraging a cloud-based architecture to enable the book entry recordkeeping of securities as well as support the burgeoning digital asset ecosystem by providing the option to create tokenized representations of a security. 

The new DTCC DSM platform will support securities through their full life cycle, and will provide broad benefits to the entire private market ecosystem including: 

• Reduced operational costs through standards and increased automation, including security identifiers. 
• Electronification of transfer restriction approvals. 
• Gross settlement as early as T+1; and 
• Cost mutualization of non-differentiated services, such as centralized stock record keeping and codification of transfer restrictions. 

Further, DTCC is exploring the ability for broker-dealers to hold customer assets while relying on DSM as a “Good Control Location” for both traditional and tokenized representations of securities, subject to regulatory consideration and approval. 

From launch, DSM will optimize primary issuance and transform secondary markets, creating new business model and distribution opportunities for participants while facilitating a digital asset ecosystem. Architected to be blockchain agnostic, DSM will initially interface with the Public Ethereum Network, but will incorporate additional public and private blockchain support based on client and market demand. 

The DSM platform will initially support pre-IPO equity securities, and will expand into other markets, positioning it to become the platform of choice for funds, debt, real estate, loans and other private instruments that are underserved today from a market infrastructure perspective. 

DTCC is currently in the production build phase of the DSM platform and, subject to final regulatory approval, is expected to launch the service in early 2022. 

Click on the above link for further information