But it won't just be the giants of banking involved.
When the AxCore protocol goes live in early 2018, the startup intends to submit the software to Hyperledger, the business blockchain consortium that has taken on the role of overseeing the infrastructure for a range enterprise distributed ledger codebases.
Deployment of the AxCore protocol will be done in phases, and even after it goes live next year, may only be adopted slowly.
"If you think about where we were a year ago on blockchain, this is a serious industry-scale blockchain production solution. And guess what, the big kahunas in banking will be on this platform."
"We believe our own internal savings will cost-justify the project. There are additional savings to the industry ... the estimates vary from one institution to another."
Even at that early phase, Markit, which will also help craft the DTCC blockchain solution, was also participating.
R3 CEO and founder David Rutter positioned his company’s role as advisor to the DTCC project from both a technological perspective and from a banking workflow perspective.
Schvey explained that while the ledger itself is permissioned, it will not be exclusively controlled by the companies implementing the protocol.
Large participating firms will run their own individual "peer nodes" on the private ledger, with smaller DTCC clients being given the option to tap into DTCC’s own node.
AxoniBankingBlockchain ApplicationsCapital MarketsDTCCIBMpost tradeR3CEV
The DTCC hasn't shared the exact amount of money it believes could be saved by moving the transactions to a blockchain or distributed ledger, but a 2015 report by Santander estimated the global savings to banks more generally speaking could be as high as $20bn a year.
By mid-2016, the DTCC submitted a request for proposal (RFP) for interested parties to "re-platform" the warehouse and cut back on reconciliation costs.
With a contract announced today, IBM will help manage the process of moving $11tn worth of credit derivatives to a custom distributed ledger built by VC-backed startup, Axoni, under the advisement of banking consortium R3CEV.
Since the distributed ledger's record is immutable, a regulatory node has the potential to give government observers access to real-time data about transactions, instead of having to wait for reports from market participants.
The distributed ledger technology being used for the project is called the AxCore protocol, created by New York-based Axoni, which last month raised $18m in venture capital.
Though the scale of this project makes it the first of its kind, the team behind it has been coming together for over a year.
"Clearly the capability of them being established as a node on the network exists with blockchain," said Childs. "But it's still very much to be determined."
In December 2015, the DTCC, IBM, JP Morgan, and R3CEV were all founding members of the Linux Foundation-led blockchain consortium that would eventually be called Hyperledger.
Initially, the distributed ledger will run in parallel with the existing settlement infrastructure, which can take as long as a week to close compared to the nearly instant settlement times expected from the blockchain solution.
Axoni founder and CEO Greg Schvey described the AxCore protocol as "widely deployed", revealing to CoinDesk that this same technology is currently being implemented to move $2tn worth of foreign exchange transactions for ICAP, which also participated in his startup's most recent round of venture funding.
Opening up the fire hose of data to government controllers, he said, may not be so appealing to all involved.
In the single, complex deal involving a distributed ledger consortium, a stock exchange, a tech startup, a legacy computer firm and an international collection of bulge bracket banks, the post-trade financial services company has begun the process of moving a significant part of its $1.5qn-worth of transaction workflow to a distributed ledger network.
Gopinath noted that by the time the Axoni technology is fully implemented, the entire life-cycle of a credit derivative will be captured as a smart contract or a "suite of smart contracts".
Regardless of the progress still yet to be made, IBM’s Gopinath minced no words about what the complicated, multi-party partnership means to anyone building on a distributed ledger.
"This is the ultimate in terms of capturing the entire business process – like we’ve always been talking about – on the blockchain," he said.
The CEO of the DTCC's derivatives service subsidiary, Chris Childs, explained to CoinDesk how a network of nodes run by the counterparties of a transaction will be linked together to not only streamline post-trade processes, but save money as well.
Over the course of the next year, the partners will work collaboratively to "re-platform" the DTCC's existing Trade Information Warehouse (TIW) for post-trade processing to a distributed ledger custom-built for cleared and bilateral credit derivatives.
However, the CEO of DTCC’s derivatives service subsidiary added that one of the most desirable potential aspects of DLT might not be available early on.
Shortly after IBM unveiled its own blockchain strategy, the little-known Axoni emerged onto the scene, rather discreetly taking a leadership role in the construction and testing of a blockchain-based credit default swaps service with the DTCC, and test members the Bank of America, Merrill Lynch, Citi, Credit Suisse and JPMorgan.
If this first large-scale implementation of a distributed ledger proves successful, there’s plenty of room to expand. The entire global credit derivatives market in 2016 was $544tn, according to the Bank for International Settlements, much of which is processed by the DTCC.
For an idea of the scale of this operation, the TIW covers all major global derivatives dealers and 2,500 buy-side firms in 70 countries, according to DTCC data.
The DTCC project will also move forward under the advisement of blockchain consortium R3CEV, which first emerged in July 2015 to help coordinate global banks looking to capitalize on blockchain and distributed ledger efficiencies.
But the goal is to eventually "retire" the existing TIW technology, according to Childs.
"Goodbye, blockchain tourism and hello blockchain systems that are large-scale. That turning point has happened."
The Depository Trust & Clearing Corporation (DTCC) has selected a series of firms to help integrate distributed ledger technology into its first large-scale, real-world application.
Since then the consortium has grown to include 77 of the largest banks in the world, and through the development of its Corda protocol, overcome a series of obstacles to become one of the most recognizable names in blockchain.
Just a few months later, in February 2016, IBM unveiled its own blockchain strategy to help a wide range of businesses across industries capitalize on potential efficiencies provided by using a common, shared ledger.
But in the DTCC’s current Trade Information Warehouse, regulators might not get reports at all. Disclosure is voluntary, according to Childs.
In addition to providing streamlined processing by supporting self-executing code, or smart contracts, it is widely heralded as a bastion of transparency.
In conversation with CoinDesk, IBM research vice president of blockchain solutions Ramesh Gopinath described the partnership:
Rutter told CoinDesk:
Now, IBM is the primary contract holder for the DTCC implementation, with "backing contracts" held between Axoni and IBM, and R3 and IBM, Gopinath said.
Current market participants, including Barclays, Citi, Credit Suisse, Deutsche Bank, JP Morgan, UBS and Wells Fargo, helped develop the technology by providing workflow guidance. Infrastructure providers IHS Markit and Intercontinental Exchange also participated.
DTCC image via Michael del Castillo; light rays image via Shutterstock
"It enables a distributed network to be built on this where, ultimately, participants could have nodes in-house," said Schvey.
"It’s a combination of really helping validate that the architecture is sound, but also making sure that the feedback from this big R3 global network is heard."
Jiang Zhuoer: BTC.Top Will Support the Camp Favored by a Majority of Hash Power in the Bitcoin Cash Hash War
Jiang Zhuo’er and his BTC.TOP , a major Chinese mining pool, will not take side in the upcoming Bitcoin Cash’s hash war between two competing camps, Bitcoin ABC and Bitcoin SV. Zhuo’er shared h
F2Pool Will Support the Mining of BCHABC and BCHSV after Bitcoin Cash Hard Fork
F2Pool, the sixth largest bitcoin mining pool in the world, announced on Tuesday that it will allow miners to mine both coins generated from the upcoming Bitcoin Cash hard fork after the chain split
IBM Says Blockchain Can Power 'Open Scientific Research' in New Patent Filing
A patent application published Thursday claims the process of conducting scientific research can benefit from the blockchain.
Led by a team at IBM's Watson Research Center, the patent application p
CFTC Fines Bitcoin Trader $1.1 Million for Crypto Fraud
The U.S. Commodity Futures Trading Commission (CFTC) has jailed a bitcoin trader and fined him over $1 million for running a fraudulent bitcoin and litecoin scheme.
According to a press release iss
Japanese Firms Claim Success in Marine Insurance Blockchain Trial
One of Japan's largest insurance companies, Tokio Marine & Nichido Fire Insurance, and IT firm NTT DATA have completed a trial that put the paperwork for marine cargo insurance claims on a blockchain.
Accenture Puts Software License Management on a Blockchain Platform
Global professional services giant Accenture has rolled out a new software license management application built with tech from distributed ledger startup Digital Asset.
Accenture announced in a pre
Singapore's Central Bank, SGX Develop Blockchain Settlement System
The Monetary Authority of Singapore (MAS) and the country's stock exchange, Singapore Exchange (SGX), have developed a settlement system for tokenized assets that can work across different blockchains
Colorado Regulators Crack Down on Four More ICOs
Colorado regulators took action against four ICOs Thursday, bringing the state's total number of cease-and-desist orders against crypto startups to 12.
The state's "ICO Task Force" rebuked Bitcoin