One Giant Leap

On October 28, DTCC became the first to bring tokenization into an established market infrastructure at scale, making an initial pool of $30tn+ of high-quality liquid assets (HQLAs) across US Treasuries, equities, and ETFs available for use on-chain.

This is a giant leap for institutional markets, which can now move assets more efficiently, access new liquidity pools, and mobilize collateral within minutes.

It’s all happening on Canton, the public blockchain where TradFi liquidity pools, digital cash, and DeFi investor demand are converging.

Canton – where business gets done

Earlier this year, a series of production trades demonstrated the power of using DTCC tokenized assets in trades, intraday repo, real-time margining, and securities lending. Atomic settlement and synchronized data increased asset velocity, eliminated inefficiencies, and unlocked capital.

Bringing assets on-chain is the essential first step. On Canton, DTC participants can put these HQLAs to use across an established ecosystem of counterparties, market infrastructures, service providers, investors, regulators and more.

DTCC’s Tokenization Service (DTS) can natively connect with more than 150 production applications to deliver new trading and financing flows across a rapidly growing network of more than 830 firms. The unlock for capital markets is tremendous, with DTCC’s high quality assets instantly available for use in transactions across the ecosystem. Across trading platforms and venues, market participants - from sellside and buyside - can access new opportunities and efficiencies:

• Pledge and accept tokenized USTs as collateral to meet intraday obligations.
• Perform financing transactions intraday and over the weekend, extending asset utility and improving capital efficiency.
• Settle on-chain equities outside of traditional market hours.

It’s begun already, with trades highlighted by Morgan Stanley, Tradeweb, Temple, Talos and Broadridge. DTS-tokenized assets are starting to be used in production under real-life conditions to finance balance sheets, hedge and margin, and support client trading and investing. That’s a far cry from carefully choreographed, tightly controlled POCs or pilots we’ve seen in the past – and it requires scalability and privacy on a proven infrastructure.

Proven scalability to support growth

Canton has demonstrated its ability to support rising volumes and demand:

• Broadridge’s Distributed Ledger Repo, launched in 2021, now processes $365Bn in daily repo volumes, up 28% YOY
• Franklin Templeton’s Benji platform, with total net assets of $668MM, gives institutional clients access to regulated, tokenized money market funds, including the world’s first SEC-registered mutual fund.
• HSBC Orion, selected for the UK DIGIT initiative for the first digitally native-issued UK government bonds. Since 2023, Orion has issued more than USD 8.3BN in digitally native bonds and now provides a Tokenized Deposit Service available in six markets across a range of currencies.
  
• Temple Digital’s daily spot trading volume has grown ~955% since early May, scaling rapidly from approximately $2M to more than $21M in early October.

Canton currently handles ~600 million annualized transactions (~1.7 million each day), including $9T of tokenized real-world assets processed monthly. This day-to-day performance and reliability are why institutions trust Canton and are actively building on the network.

But the ability to scale can’t be limited to current conditions. DTCC will expand tokenization to encompass nearly all of the $114T in assets it manages, putting more equities and corporate, muni, and agency bonds into play on-chain. Other market infrastructures will come online soon.

As 24/7, always-on markets become a reality and the traditional barriers that hinder or slow investment fall away, unexpected opportunities will arise. We will see new offerings and solutions that deliver value to our global financial ecosystem, and in order to get there, the infrastructure has to be able to absorb the volume of the old and the opportunity of the new.

Privacy at the core

Institutional markets and systemically important financial institutions demand privacy. The only way to prevent exposure of sensitive client or trading data is to build in privacy from the start.

Unlike other public blockchains, the ability to safeguard data and control what is shared and who can see it sits at the very core of Canton.

That matters, because DTCC has just made it possible for trillions of dollars of assets to come on-chain and be used in real transactions. How, when, and where those transactions take place can’t be public.

With Canton, you can configure the level of privacy you want, from fully permissioned to permissionless, with confidence that necessary data and records are secure yet traceable to satisfy regulatory requirements.

The commercial opportunity

Over the coming months, the commercial impact will become even more tangible:

• Efficient, 24/7 financing becomes less costly and risky, supported by deep liquidity pools of tokenized HQLA and on-chain cash (tokenized deposits and money market funds).
  
• Tokenized treasuries make fully on-chain reserves possible for stablecoins and money market funds, paving the way for instant creation and redemption and reducing the latency and risk that accompany off-chain reserves.
  
• DeFi, which has traditionally relied on crypto-assets for collateral, now has access to tokenized treasuries and equities. Beyond supporting institutional grade DeFi protocols and activity, trading can be further democratized as investors gain access to these HQLAs through their wallets.

As DTC participants put their tokenized assets across the entire trading and post-trade value chain to meet specific collateral, hedging or lending needs or to address big-picture liquidity and capital requirements, the ability to trade, mobilize and optimize assets at speed and scale becomes a differentiator.

That’s because when assets work together, markets operate continuously, and trading partners connect with privacy on a trusted and scalable infrastructure – finance flows.

It’s time to decide when and how to engage or risk being left behind.