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00:00We're with Frank LaSala, of course, our president and CEO of DTCC. I think most of our viewers know exactly
00:07what that is, but I don't necessarily know if they always know exactly how it works. And I do want
00:11to talk a little bit about that. I mean, you are the plumbing. Basically, you are one of the companies
00:16that sort of makes our financial system sound in one way or another. And it's a financial system that's changing
00:21a lot. Changing dramatically. And I am curious if maybe you can kind of talk a little bit about the
00:25changes from being this sort of behind the scenes player to probably one that's even more critical
00:29given all the financial innovation that has come about as of late. Yeah, no, no, I appreciate it. Look, it's
00:35a very exciting time to be in the infrastructure part of the capital markets of the U.S. So, you
00:41know, as you said rightly, DTCC has been part of that for over 50 years. And we were created actually
00:48by an act of Congress when settlement of securities, the finality of the final contract that needed to be consummated
00:55between a buyer and a seller was done very manually on paper.
00:59And as volumes grew, the paper could not keep up. And that presented systemic risk to the global capital markets.
01:07And, you know, Congress saw that early on. And they created what's essentially the framework for what DTCC is today.
01:13So our main job is to make sure that we are settling and clearing very quickly those transactions that happen
01:21every day. So just to give you a sense of sort of size and scope, we currently settle and clear
01:28at DTCC.
01:29$20 trillion a day. That's two-thirds of the U.S. global GDP. And that's all types of securities assets,
01:36cash securities assets, equities, bonds, treasuries.
01:39And so that really helps keep the capital markets functioning pretty effectively, providing ample liquidity for that settlement and making
01:47sure that buyers and sellers' trades consummate every day effectively and safely.
01:51Well, let's talk about sort of the narrowing window of settlement. The idea that back in the paperwork crisis, what
01:57were we like, you know, we're basically a week to settle. We're now at T plus one.
02:02And if you believe a lot of people in this room at some point, we'll just have continuous trading and
02:07basically same-day settlement. Are we ready for that?
02:09I think the industry is moving in that direction. But as you rightly say, Romain, we've got this confluence of
02:16technology. And I can talk about AI, blockchain. It doesn't matter.
02:20And I think it's changing the way we approach this evolution that you rightly talk about. What I would say
02:27is this. We've clearly moved to T plus one, which was very good.
02:30It reduced systemic risk, gave liquidity back to the industry much more quickly, which means balance sheet relief for many
02:38of the financial services firms,
02:40liquidity relief for those same firms, without introducing any more risks. That was really the key to T plus one.
02:46What I would say is there is a real interest in moving to T zero.
02:51And I think it will happen. But in order for it to happen, there's going to be changes in legislation
02:56like reg NMS that the SEC has.
02:58But I do think blockchain will provide us the optionality to do some types of transactions in a T zero
03:05environment, even without the structural change of actually going officially from T one to T zero.
03:11But I am curious about that transition. I mean, obviously, a lot of people see the path to that through
03:16tokenization. That that might be the easiest, least frictionless way to actually do it.
03:21And I know you're actually already kind of moving in that direction. Are you preparing? I know you're preparing to
03:26launch a new product.
03:27Is that still on track? And how broad is that going to be in terms of what it takes in?
03:32We are. And so getting back to the 24 by 7 trading that you talked about,
03:37we're already plugging into the ATSs and the exchanges. And that will the 24 by 5, which is the first
03:43step toward 24 by 7, will probably be in full production at the end of the year.
03:49So that's when the exchanges will plug in to our infrastructure and they will be able to provide that. So
03:54that's sort of a foregone conclusion.
03:55We've tested with the industry. That's coming. And I think it's good for the capital markets. And then ultimately, we'll
04:00probably look at 24 by 7.
04:02That's that's clearly in the works. And again, we will be ready for that.
04:06Where I think tokenization can help us is because of the instantaneous nature of it. That can that could help
04:13facilitate facilitate 24 by 5 and 24 by 7.
04:16But it's not necessarily on the critical path to do it in the current messaging environment that we operate in
04:23in financial services. It can handle that today.
04:25The issue is for most messaging systems, you do need one or two hours a day for batch processing. And
04:32so we can operate 24 by 5 or 24 by 7 trading even with a one or two hour batch
04:38process.
04:39You just you end at one point, you pick it up on the other. And that will have no deleterious
04:44effect to investors because it doesn't interrupt the trading venues at all.
04:49OK. But what about the accuracy or the integrity of actually making sure that what gets settled is actually what
04:56is supposed to be settled when you have a day to do that or three days or five days like
05:00in the old days.
05:01Obviously, you had a lot of time to sort of make sure that everything was sort of crossed off where
05:06it was supposed to be.
05:06If everything is continuous and you have the system here, this becomes, I would think, much more technologically driven in
05:13order to make sure that that happens.
05:14Is the technology reliable enough or will it be reliable enough?
05:18I think it is. And again, as we employ more blockchain in our case, we have to continue to test
05:24it to to ensure that it is reliable and we need to be assured that it is reliable.
05:29That's that's our responsibility. What I would say is that conversation that you just mentioned is technology ready, willing and
05:37able to do it has started when we were a T T plus five.
05:40Not too long ago, we went to T plus two. And as you rightly say, back in 24, we went
05:44to T plus one.
05:45We continue to improve and invest in the technology as did the industry and its work and it's held up.
05:51Do you think and I want to ask you, too, because I saw that the ECB has already kind of
05:54moved forward with the tokenization product, but it is backed by by the central bank currency.
05:59Do we need something like that here in the U.S. where the Fed gets actually involved in actually providing
06:05some sort of currency mechanism to back all this?
06:07Or is that not necessary? I think I think ultimately that won't need to be the case. But I think
06:12right now it's not that's not necessary.
06:15The reason I say that is because, you know, you've got the the proliferation of stable coins all back behind
06:22with treasuries and U.S. dollars, actually hard currency behind it,
06:26which is good. And now I think what a lot of the major center banks are really focused on are
06:31tokenized deposits.
06:32And so I think those two stable coin and tokenized deposits will be a good a good proxy for ultimately
06:40getting to central bank digital central bank currency,
06:43which is what you're talking about. But I don't think whether whether or not whenever the Fed decides to do
06:49that, if they do it,
06:49we can still move down a path because we have stable coin and tokenized deposits and that allows the facilitation
06:56of settlement as well.
06:58But I do absolutely agree with the premise of your question, which is the Fed will have to decide at
07:03some point.
07:03We as an industry will have to figure out, do we really need central bank currency in a tokenized form
07:10to facilitate that continued evolution of the capital market?
07:13Are you surprised by kind of the embrace that we've seen of blockchain and some of the other digital technologies?
07:18Because I mean, when this whole started,
07:20this whole crypto world started, the whole idea was it was decentralized. I mean, it was right. And now it's
07:26becoming sort of part of the ecosystem.
07:28Can that coexist? I think it can. And I think one of the things that has really impressed me in
07:34the past year is, as an industry,
07:36we've now sort of in many ways decoupled cryptocurrency as an asset class, a financial product, as you will, like
07:46gold or equities from the underlying technology.
07:49And if you look at the history of financial services, particularly capital markets, it has always embraced new technology. It
07:57has to.
07:57And there's this symbiotic relationship between technology and financial services that I don't know if we see it as closely
08:06as we do versus other industries.
08:09So it's not a surprise to me that blockchain has really garnered the interest. I think we're still in an
08:14experimental phase with it.
08:16But there are clearly some use cases that even in these early days of the growth and adoption of blockchain,
08:24there are some very compelling use cases that we as an industry are working on. I think it will be
08:30net positive for the global capital markets.
08:33Frank, I do have to ask you about the central treasury clearing deadline, which is coming up at the end
08:38of this year.
08:40A, are you ready for that? And more importantly, what is sort of the net benefit coming out of that
08:46once it's up and running and everybody's doing it?
08:48Yeah. So the answer to your first question is DTCC has been ready since March.
08:53We've been spending a number of years preparing systems, working with the regulators, obviously working with the Fed, working with
08:59the industry.
09:00And we've already rolled out some new products because of treasury clearing.
09:03So we are ready to go. Cash comes in in December and then it's anticipated repo market will come in
09:10in June.
09:11So, and what I would also say, the testing that we've had with the industry has been very, very successful.
09:16And we've already had a number of industry participants begin to operate in our environment for treasury clearing
09:22because they know they need to comply anyway, so they've just gotten a little bit ahead of it.
09:26I think the main benefit for treasury clearing is, again, bringing more centralized clearing into one place, which allows for
09:36greater netting,
09:37which ultimately provides balance sheet relief, liquidity relief, and reduces risk for the industry.
09:43So we think that the treasury clearing mandate was the right thing to do.
09:47It will draw more assets and liquidity pools together, which ultimately is very efficient for the industry and reduces risk,
09:55which is what we're all about. So it's moving ahead. The industry, obviously, there are some loose ends that still
10:00need to be nailed down.
10:01That's more with, you know, scope. And I know that the SEC is working on it with the industry with
10:07us.
10:07But I think there's a great line of sight. I'm very optimistic about it.
10:10I do just have to ask you about the conference that we're at and obviously a big focus right now
10:14on just market integrity.
10:16And I think about how your career and you've seen the evolution of financial markets.
10:21As you look at it today in 2026 and maybe where it will be once you retire, is it safer
10:27and more importantly,
10:27is it as reliable or more reliable than maybe what it was when you started your career?
10:31I would say without a shadow of a doubt, our capital markets are stronger, have more deep, deeper liquidity than
10:40we've ever had.
10:41And I think we've learned so much, particularly from the great financial crisis.
10:46The industry had to do a lot of introspection on what happened, both from a financial product standpoint, from a
10:52risk standpoint.
10:53And I think we took it to heart. And I think we are a much safer system, more reliable system,
11:00more efficient system than we ever have.
11:02And again, it's this symbiotic relationship between risk, technology, the capital markets and protecting investors, which is always top of
11:11mind.
11:11So I feel really good about our industry. I feel really good about the future.
11:15It's an exciting time for the global capital markets.
11:18And the U.S., because of the depth of all liquidity, the size of our capital markets,
11:23we are really in a position to lead that forward and lead that transformation for the entire world.
11:29And I think we're doing a good job with it.
11:31All right, Frank, really appreciate you stopping by.
11:33Good being with you.