Financial market infrastructure group CLS has announced a collaboration with IBM to develop a proof of concept (PoC) for distributed ledger technology (DLT) platform LedgerConnect.

The aim is to enable banks, buy and sell side firms, FinTechs and software vendors to deploy, share and consume services hosted on a shared distributed ledger network.

Financial institutions will be able to access services in areas such as know your customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data.

By hosting these services on a single, enterprise-grade network, organisations can focus on business objectives rather than application development, enabling them to realise operational efficiencies and cost savings.

Nine financial institutions, including Barclays and Citi, are participating in the PoC and have selected services from a number of vendors, including Baton Systems, Calypso, Copp Clark, IBM, MPhasis, OpenRisk, SynSwap and Persistent Systems.

CLS stated that as financial institutions increasingly work to implement DLT into their operations, capital markets remain saturated with multiple systems performing the same business functions and with siloed pockets of data that require expensive reconciliation processes.

“DLT can help reduce these inefficiencies and improve the speed of doing business by providing a single, shared version of events and one implementation of common business functions,” it added. “However, it can be cost prohibitive and time-consuming for each vendor, bank, or consortium to create and operate its own unique DLT infrastructure for multiple services when proven technology already exists.”

LedgerConnect aims to solve this problem by providing a single shared and secured network on which multiple services can be deployed and consumed.

Operating on a private permissioned network based on the IBM Blockchain Platform and Hyperledger Fabric technology, LedgerConnect will be designed for regulated and security-conscious enterprises and available across asset classes. Support for additional ledger technologies may be provided in the future, based on market demand and developments.

Marie Wieck, general manager at IBM Blockchain, said: “Building on the success of CLSNet and leveraging the strong relationship CLS has with the world’s leading financial institutions, LedgerConnect is uniquely positioned as a blockchain marketplace for the financial services industry, which will accelerate innovation across the ecosystem with value added services for blockchain networks.”

On completion of the PoC, with generation of market demand, and receipt of all necessary regulatory approvals, CLS and IBM plan to make the platform widely available to the industry.

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