DTCC and Accenture Unveil Governance Operating Model to Manage Risks and Promote Safety Across Distributed Ledger Technology Landscape
NEW YORK, LONDON, HONG KONG, SINGAPORE, and SYDNEY, September 9, 2019 -- The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry, and Accenture, a leading global professional services company, today published a white paper, Governing DLT Networks, introducing a DLT governance operating model to manage risks and consequences of an evolving DLT landscape, to ensure the safety and soundness of the network for the benefit of all participants and to better enable DLT to reach its full potential.
DLT has attracted global attention for its potential to modernize and improve corporate and enterprise operations. The model proposed in the paper addresses the responsibilities and critical functions in operating and maintaining a DLT platform, including a governing function to make decisions that will affect activity, connectivity, software changes, contractual agreements and transaction finality for every participant across the entire network.
"The financial services industry has seen unprecedented growth in data and processing power over the last 50 years," said Robert Palatnick, Chief Technology Architect, DTCC. "Distributed ledger technology, with its built-in consistency, security and privacy, holds great promise to transform the digital landscape, but DLT’s full potential will only be realized with the implementation of a strong and transparent governing model."
The white paper introduces a DLT Governance Model (DLT-GM) for operating and maintaining a private, permissioned DLT platform including eight functional areas:
- Governance, providing the highest-level risk and control oversight, and strategic decision-making functions for the DLT network community with four distinct areas of responsibility: Steering Committee, Functional Working Group, Technical Working Group, Change Committee.
- Participant Lifecycle, including the management and operations of every aspect of onboarding a new network member, all the interactions during that member’s participation in the network and the steps to off-board a member.
- Runtime Operations, covering the day-to-day execution of the DLT implementation including major functions focused on DLT runbook operations such as monitoring, reporting, support, change and release management.
- Data Governance introduces new concepts around participant entitlement and confidentiality models, and reference data controls.
- Third Party Management, highlighting the function assigned to supervise service providers and/or vendors connected to the Network.
- Platform Management, which is the DLT ecosystem version of the traditional “application development” model, adjusted to support the multiple layers of DLT.
- Infrastructure, to address oversight of the core network management functions, including managing third-party providers and defining ownership responsibility for ongoing infrastructure operations.
- Legal and Finance, to address areas including but not limited to vendor and licensing risk, patent risk, open source risk and risk associated with crossing global borders, where tax models and reporting have yet to be discussed.
"The power of DLT can deliver significant operational efficiencies to the industry which will only be fully realized if we ensure that we all know how to play and reap the benefits together," said Wynn Davies, managing director, Accenture Capital Markets. "Working in collaboration with DTCC to lead this important work, Accenture has developed a governance model to manage the risks and consequences of a distributed ledger landscape, and we believe this governance paper is the beginning of a critical dialogue that needs to continue. Research, experimentation and learning about the challenges and potential for DLT-based governance processes will be essential as these platforms become more widely adopted."
The DLT Governance Model (DLT-GM) outlined in the white paper is a critical component of DTCC’s Trade Information Warehouse (TIW) initiative to migrate an existing central, industry-wide ledger for Credit Default Swaps (CDS) from a legacy mainframe database to a DLT platform leveraging cloud.
With over 45 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From operating facilities, data centers and offices in 16 countries, DTCC, through its subsidiaries, automates, centralizes and standardizes the processing of financial transactions, mitigating risk, increasing transparency and driving efficiency for thousands of broker/dealers, custodian banks and asset managers. Industry owned and governed, the firm simplifies the complexities of clearing, settlement, asset servicing, data management, data reporting and information services across asset classes, bringing increased security and soundness to financial markets. In 2018, DTCC’s subsidiaries processed securities transactions valued at more than U.S. $1.85 quadrillion. Its depository provides custody and asset servicing for securities issues from 170 countries and territories valued at U.S. $52.2 trillion. DTCC’s Global Trade Repository service, through locally registered, licensed, or approved trade repositories, processes over 14 billion messages annually. To learn more, please visit us at www.dtcc.com or connect with us on LinkedIn, Twitter, YouTube and Facebook .
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions — underpinned by the world’s largest delivery network — Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 482,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.