Distributed ledger technology in payments, clearing, and settlement


– David Mills
– Kathy Wang
– Brendan Malone
– Anjana Ravi
– Jeff Marquardt
– Clinton Chen
– Anton Badev
– Timothy Brezinski
– Linda Fahy
– Kimberley Liao
– Vanessa Kargenian
– Max Ellithorpe
– Wendy Ng
– Maria Baird


Digital innovations in finance, loosely known as fintech, have garnered a great deal of attention across the financial industry.
Distributed ledger technology (DLT) is one such innovation that has been cited as a means of transforming payment, clearing,
and settlement (PCS) processes, including how funds are transferred and how securities, commodities, and derivatives are
cleared and settled. DLT is a term that has been used by the industry in a variety of ways and so does not have a single definition.
Because there is a wide spectrum of possible deployments of DLT, this paper will refer to the technology as some combination
of components including peer-to-peer networking, distributed data storage, and cryptography that, among other things, can
potentially change the way in which the storage, recordkeeping, and transfer of a digital asset is done.
The driving force behind efforts to develop and deploy DLT in payments, clearing, and settlement is an expectation that the
technology could reduce or even eliminate operational and financial inefficiencies, or other frictions, that exist for current
methods of storing, recording, and transferring digital assets throughout financial markets. The purported benefits of DLT that
could address these frictions, including improved end-to-end settlement speed, data auditability, resilience, and cost
efficiency, have led industry participants to investigate the application of DLT to a wide variety of PCS processes. Proponents of
the technology have claimed that DLT could help foster a more efficient and safe payments system, and may even have the
potential to fundamentally change the way in which PCS activities are conducted and the roles that financial institutions and
infrastructures currently play.

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