The securities industry of today is very much about agreeing the trade first, then making sure you get hold of your cash or securities in time for the settlement. Thus, the pre-funding that would be necessary for a DLT-enabled real-time settlement in the future is a remote dream. Or is it? A panel at the World Forum of CSDs shared indications that a path towards prefunded transactions could actually be feasible. Indeed, Nigerian CSD head Haruna Jalo-Waziri described how his market runs on it already.

The questions that were discussed on the panel included how to ensure a valid delivery-versus-payment on DLT and what are the challenges of CBDC use by non-native platforms.

In the public discussion about the prospects for traditional financial institutions moving towards DLT-based trade, the settlement of the tokenised securities leg is sometimes described as the relatively simple half. The bigger question has been how the money should be issued and settled. The idea of central bank digital currencies, CBDCs, is partly a response. In Prague, Piero Cipollone of the Banca d’Italia argued its case, pointing out that Europe’s centralised Target2-Securities is already working well settling trades worth 1 trillion euro per day or so. On the other side, Romaios Ram of Fnality represented what he described as a commercially based alternative.

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The speaker list: 
Holger Neuhaus (Moderator), Head of division on Market innovation and integration, European Central Bank,
Piero Cipollone, Deputy Governor, Banca d’Italia,
Rhomaios Ram, Chief Executive Officer, Fnality,
Haruna Jalo-Waziri, Chief Executive Officer, Central Securities Clearing System Plc (one of Nigeria’s CSDs),
Dirk Bullmann, Global Head of Public Policy, CLS,
Nick Kerigan, Managing Director, Head of Innovation, Swift.

• The World Forum of Central Securities Depositories runs in Prague 24–26 May 2023. Our coverage of it is listed here.

(Our posts will be low on direct quotes, as the event welcomes journalists on the condition that such must be explicitly confirmed with each speaker, which adds an operational hurdle.)