A new DTCC study has shown that distributed ledger technology, aka blockchain, can scale to meet the volumes of the U.S. equity market — more than 100 million trades a day. The study, which was conducted by Accenture with support from technology firms Digital Asset and R3, showed a distributed ledger could process 6,300 trades per second continuously for five hours to meet the 115,000,000 daily trades at peak rates in the markets. It chose Accenture after an RFP showed the company had the best knowledge and toolset for the study.
“Currently, public blockchains supporting crypto-currencies operate at single or double digit per second performance, which until now was the only indication of the potential volume that a private DLT might be able to support,” the DTCC said in its announcement.
Unlike the crypto currency blockchains which are open to the public, the DTCC distributed ledger is only open to users who have permission — a private, permissioned distributed ledger.
Jennifer Peve, managing director of business development and fintech strategy, at the DTCC, said the study started with looking at what would be needed on a per-second trading basis and total volume per trading day. Then they ringfenced separate prototypes for the two platforms and connected them to simulated trading nodes.
“To make sure that we really demonstrated robustness and completeness, we wanted a target high enough to measure the performance and allow it to maintain that for a continuous period of time.”
“This project answered key questions and built serious confidence in blockchain’s ability to drive large scale transformation,” said David Treat, managing director, global blockchain lead, Accenture. “The close collaboration with the DTCC and our alliance partners, Digital Asset and R3, enables us to push DLT performance to new levels against real world requirements and conditions.
This was the first extensive study of its kind.
“The reality is that for the private distributed ledger, there wasn’t a known performance or scalability figure,” Peve said. “All we had to go on was what public blockchains for bitcoin performance, and that is not an apple to apple comparison. Private blockchains are fit for purpose for our industry. They have very different architecture, different privacy and sharing models, data storage, smart contract functionality, and governance model. There are a number of factors that go into performance and scalability of a distributed ledger.”
The showed there is a path forward for distributed ledgers. The study operated on DTCC’s AWS cloud.
“We were able to achieve a much higher scalability rate that we had anticipated when we started,” Peve said. The study has helped build operational confidence in distributed ledger technology, she added. The DTCC has also worked with IBM, Axioni and R3 to develop a distributed ledger for credit derivatives in a trade information warehouse.
Rob Palatnick, managing director of IT architecture at DTCC, said the company has been actively involved in distributed ledger technology projects for more than three years.
“During that time, we have seen technology platforms continue to mature, but concerns have loomed around the scalability of DLT, he said. “This study is a natural next step in our efforts to advance the use of DLT, and we look forward to continuing to work collaboratively with the industry to identify new opportunities to use the technology to enhance the post-trade process.”