Payments Canada, the Bank ofCanada, TMX Group and Accenture have demonstrated that the instantaneous clearing and settlement of securities on-ledger is feasible, showing for the first time that both central bank cash and assets can be tokenized to complete an instant, end-to-end equity settlement on distributed ledger technology (DLT).
Project Jasper is a collaborative research initiative between Payments Canada, the Bank ofCanadaand TMX group to experiment with an integrated securities and payment settlement platform based on DLT. Jasper III, a continuation of previous work launched inMarch 2016, is a proof of concept that was delivered by Accenture, leveraging R3’s Corda DLT platform. It explores the impact and potential benefits of DLT on broader Canadian financial market infrastructure.
“This proof of concept shows that it is possible to deliver payments in a way that has never been done before – by directly swapping cash from buyers to sellers, resulting in instant settlements,” saidGerry Gaetz, President and CEO of Payments Canada. “We continue to see how the application of distributed ledger technology can help extend the vision of payments innovation inCanadaand potentially, one day, help promote financial market integration, both nationally and internationally.”
Previous phases of Project Jasper focused on the clearing and settlement of high-value interbank cash payments using DLT. Phase III explores an integrated payments and securities infrastructure. The proof of concept allowed clearing and “delivery versus payment” settlement immediately, demonstrating that it’s possible to complete post-trade settlement on a DLT platform. The ability to settle transactions immediately significantly reduces counterparty risk and frees up collateral.
“We have witnessed an impressive achievement and an important financial technology milestone for Canadian capital markets with the successful transaction of tokenized securities and cash in their basic forms,” saidJohn Lee, managing director, Enterprise Innovation & Product Development, TMX Group. “Many complex challenges remain as we move ahead, but we look forward to the crucial collaborative work necessary to effect substantive, transformative change in global markets.”
Jasper III is currently the only proof of concept that maintains privacy for market participants and their transactions by giving only the parties involved in specific transactions the ability to view the transaction history, without providing the same visibility to other participants on-ledger.
“Maintaining privacy, as well integrating other assets onto the same ledger as payments, would provide important benefits for the financial system from the use of a DLT-based wholesale payment system,” saidCarolyn A. Wilkins, Senior Deputy Governor at the Bank ofCanada. “Indeed, a key lesson from prior phases of Jasper was that the benefits of a DLT-based wholesale payment system likely lie in its interaction with the broader FMI ecosystem. Such benefits would come from reaping economies of scope and reducing costs to participants.”
John Velissarios, Accenture’s Blockchain Technology & Security Lead, said: “Project Jasper positionsCanadaas a leading innovator, the first to fuse assets and fiat currency on ledger, which is fundamental to moving towards production.Canadais the first developed market to focus on a full-cycle, on-ledger, trade-settlement system ? laying the groundwork for the Canadian financial market infrastructure to collaborate with similarly positioned global partners to derive new, mutually beneficial opportunities and benefits of DLT.”
Jasper III initial findings were presented at the Payments Canada SUMMIT byAndrew McCormack, vice president of Payments & Technology at Payments Canada;John Leeof TMX Group;Scott Hendry, senior special director of Financial Technology at the Bank ofCanada; andJohn Velissariosof Accenture. A white paper detailing the complete findings will be released later this year.
