Payments Canada, the Bank of Canada, TMX Group and Accenture have shown — through their collaboration on Project Jasper — that it is feasible to instantaneously clear and settle securities on-ledger, and have demonstrated for the first time that both central bank cash and assets can be tokenized to complete instant equity settlements via distributed ledger technology (DLT).
Payments Canada owns and operates the country’s payments clearing and settlement infrastructure, and works to ensure the privacy and security of Canada’s financial transactions. Every day, the company processes roughly $200 billion in payments, while the Bank of Canada — the country’s central bank — instills monetary policies to lower inflation and promote financial stability.
TMX Group operates cash and derivatives markets and clearinghouses for asset classes like equities and fixed income. The organization provides trading facilities to Canada’s financial community, while Accenture offers solutions in strategy, technology and operations to improve business-client relations and to create sustainable value for stakeholders.
Project Jasper is a collaborative research initiative between the four institutions to understand how DTL could transform the payments system, and to experiment with a DLT-based integrated securities and payment platform. Jasper III, a continuation of a March 2016 venture, is a proof of concept that explores the benefits of DLT on Canada’s financial systems.
Gerry Gaetz, the president and CEO of Payments Canada, commented, “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. We continue to see how the application of distributed ledger technology can help extend the vision of payments innovation in Canada and potentially, one day, help promote financial market integration both nationally and internationally.”
At first, Project Jasper focused primarily on approving and resolving high-value interbank cash payments using the technology behind distributed ledgers. The program is now being reformed to explore integrated payments and securities and to push a “delivery versus payment” system to cut out future counterparty risks and collateral blockades.
Jasper III is the only proof-of-concept development that provides transaction histories to parties specifically involved in those transactions. Other participants are prevented from accessing this data, ensuring that the privacy of market participants is maintained. A white paper further detailing Jasper III’s findings will be released later this year.
“Maintaining privacy, as well [as] 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,” said Carolyn A. Wilkins, senior deputy governor at the Bank of Canada.
“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 [financial market infrastructure] ecosystem. Such benefits would come from reaping economies of scope and reducing costs to participants.”