DTCC (Depository Trust & Clearing Corporation)

• Blockchain Council
• September 02, 2024

DTCC Uses Chainlink for Blockchain Mutual Fund Data

The Depository Trust & Clearing Corporation (DTCC) recently announced the successful conclusion of its Smart NAV pilot, which utilized Chainlink’s advanced technology to upgrade its Mutual Fund Profile Service I (MFPS I). This project signifies a major leap in integrating Blockchain technology into financial services, aiming to streamline data sharing and consumption.

By using Chainlink’s Cross-Chain Interoperability Protocol (CCIP), the DTCC has been able to effectively transform and transmit pricing and rate data across various Blockchain networks. This chain-agnostic approach allows for the smooth incorporation of mutual fund data into Blockchain-based platforms, thereby enhancing overall efficiency.

The pilot, known as Smart NAV, attracted participation from several major industry players, including American Century Investments, BNY Mellon, and JPMorgan. This involvement highlights the broad interest and collaborative spirit within the financial sector towards exploring Blockchain technology’s potential.

One of the key achievements of the Smart NAV pilot was its demonstration of the practical use of on-chain data in multiple applications. It showed how smart contracts could automate data routing and ensure a standardized approach to data dissemination, which is vital for avoiding future fragmentation in the industry. Chainlink’s CCIP was instrumental in this process, providing a reliable solution for cross-chain data transmission.

Participants in the pilot reported various benefits, such as a reduction in manual processes and the potential for new financial products enabled by Blockchain. The release of the pilot report also positively impacted the value of Chainlink’s native token, LINK, which saw a significant increase of 21% against the U.S. dollar shortly after the report’s publication on May 16.

With over 50 years as a trusted Financial Market Infrastructure (FMI), DTCC is ideally positioned to support the financial industry’s exploration of digital assets. The Smart NAV pilot is part of DTCC’s broader efforts to innovate within financial services through the use of digital assets and Blockchain technology.

In response to the rising interest in mutual fund tokenization, DTCC recognized the opportunity to provide on-chain price and rate data, which could be crucial for new initiatives. By maintaining a chain-agnostic stance, DTCC aimed to distribute Net Asset Value (NAV) data across multiple blockchains, facilitating the development of new use cases.

The pilot involved extending the capabilities of DTCC’s Mutual Fund Profile Service I (MFPS I), the industry standard for NAV data transmission. In collaboration with Chainlink and ten other market participants, DTCC explored the feasibility and value of a distributed ledger technology (DLT)-based solution for price and rate dissemination. The goal was to integrate foundational data into various on-chain use cases, such as tokenized funds and bulk consumer smart contracts, to support future exploration in the asset management sector.

The pilot’s findings indicate that delivering structured data on-chain and establishing standard roles and processes can support a wide range of downstream applications. These include brokerage portfolio applications and other business workflows, benefiting from automated data dissemination and access to historical data in real-time.

The core capability of Smart NAV is to make trusted, verifiable data available on any Blockchain network, supporting its use in business workflows. DTCC acted as the data provider and overseer of the on-chain solution, while Chainlink’s CCIP facilitated interoperability. The success of the pilot suggests that this approach could be applied to a broader array of applications beyond just price and rate data dissemination across multiple blockchains.