Two developments in the past ten years have focused minds on the future of clearing. First, the global financial system had a near death experience as a result of complex multi-lateral clearing arrangements for credit default swaps. Second, Blockchain and Distributed Ledger Technology have arisen to much fanfare. However, the technology is evolutionary, not revolutionary, and attempting to replace the clearing and settlement infrastructure with this technology can carry the system not into the future, but into the past.
In Greenwich Associates’ new white paper, Steampunk Settlement: Deploying Futuristic Technology to Achieve an Anachronistic Result , they discuss the medieval results that come from the expensive deployment of futuristic technology, and challenge the idea that DLT could replace today’s clearance and settlement infrastructure.
Hear about the story behind the “Steampunk Settlement” white paper in these conversations between Greenwich Associates author Ken Monahan and DTCC’s Michael McClain, Managing Director and General Manager of Equity Clearing & Settlement in these brief videos:
White Paper Overview (3m 47s):
Behind the Scenes of Steampunk Settlement (2m 43s):
DLT Maximalists: The Medieval Results of Replacing Clearance & Settlement with DLT (5m 51s):
Crunching the Numbers: Big Impacts on the Market Makers (2m 44s):