As a trusted Financial Market Infrastructure (FMI) and partner to financial market participants for over 50 years, DTCC is well positioned to support the industry’s ongoing exploration of digital assets and their application in financial services.
As part of this exploration, DTCC developed a new pilot, Smart NAV, which leveraged DTCC’s digital asset capabilities, as well as Chainlink, a leading technology platform for cross-chain interoperability, and blockchain abstraction.
Overview
In recognition of increased industry attention on mutual fund tokenization, DTCC identified an opportunity for on-chain price and rate data that can serve as a key enabler to the exploration of new initiatives. Taking a ‘chain-agnostic’ approach (i.e., the ability to disseminate the NAV data across (virtually) any blockchain) would be key to enabling other use cases to build atop Smart NAV’s foundations.
The Smart NAV pilot was designed to explore an extension of a DTCC service, Mutual Fund Profile Service I (MFPS I), the industry standard for transmitting “‘Price and Rate” data (referred to as “NAV data”). DTCC, along with 10 market participants and Chainlink, worked together to evaluate the feasibility and industry value of delivering a DLT-based price and rate dissemination solution that can enable new benefits and support experimentation in the asset management space.
Key Takeaways
The pilot found that by delivering structured data on-chain and creating standard roles and processes, foundational data could be embedded into a multitude of on-chain use cases, such as tokenized funds and “bulk consumer” smart contracts, which are contracts that hold data for multiple funds. This capability can support future industry exploration and can power numerous downstream use cases as well, such as brokerage portfolio applications. Additional benefits include real-time, more automated data dissemination and built-in access to historical data.
The Path Forward
In its simplest form, Smart NAV centers around providing the capability to make trusted, verifiable data available on (virtually any) blockchain network(s) to support the use of that data in business workflows. DTCC served as the provider, or sourcer, of that data, as well as the governor of the on-chain solution that stores that data, while Chainlink’s CCIP served as the interoperability layer. The core capability explored is applicable across endless use cases that could ultimately power more streamlined and efficient operational processes.
Based on these findings, we see an opportunity to potentially expand the scope of the pilot to explore how the technical capability leveraged in the pilot could power a broader range of use cases beyond the dissemination of price and rate data and across a greater number of blockchains.