Tokenizing $100T in Treasuries and equities without breaking the market, with Nadine Chakar

0:00 DTCC holds more than $100 trillion in securities and settles nearly every trade in the US market. We settle four quadrillion dollars worth of settlements a year. And before you go and google quadrillion, that's 16 zeros.

0:14 We can't afford to have a bad day. If we have a bad day, then the whole market does as well. In an always on, 24/7, there is no time to recover. How many chains actually matter in 2030?

0:26 We have not found one blockchain that could be, uh, the end all, the be all, end all to everything. You know, atomic settlement. Well, atomic settlement is great, okay? It's awesome, but how do you...

0:37 There's not enough money on the planet, you've heard me say this a million times, to be able to do a gross settlement for $4 trillion, uh, $4 quadrillion. There isn't.

0:46 Right now, as we speak, is the vote on the CLARITY Act. How does that influence what, how that will- I don't know. I'm looking at my TV here.

0:53 [upbeat music] Welcome to another episode of 51 Insights, today with Nadine Chakkar. Nadine, welcome to the show. Thank you so much for having me.

1:10 Nadine, DTCC holds more than $100 trillion in securities and settles nearly every trade in the US market.

1:18 On July 15, you moved treasuries and equities as tokens in live production for the first time, and the full launch is in October. You lead the DTCC digital assets business.

1:29 Nadine, I'm extremely excited to have you on the show today. Some of the people listening might never have heard of DTCC, and you custody more than $100 trillion in securities.

1:39 Could you just put that scale in perspective? Absolutely. I can't believe people haven't heard of DTCC.

1:45 We're really synonymous, just like Apple now [laughs] on a more serious basis, So actually it's, it's not a bad thing that you have not heard of DTCC. That means we're doing our job, uh, day in and day out.

1:56 At our core, we serve as market infrastructure, uh, for the US markets.

2:01 So we pretty much are the people that make sure every time you buy or sell a stock, uh, that the stock settles and that you, that the money goes in the right place, and most importantly, uh, that we keep impeccable records that match, matches the buy and sell.

2:16 So we're, we're that infrastructure. As Mark indicated, we do, uh, we do have a tremendous responsibility in safekeeping over $114 trillion in assets.

2:26 Uh, so that's pretty much, uh, most of the assets, uh, that are in the United States. And in addition, we settle $4 quadrillion worth of settlements a year. And before you go and google quadrillion, that's 16 zeros.

2:39 So the scale is overwhelming, and that's why we take our responsibilities very, very seriously. We can't afford to have a bad day. If we have a bad day, then the whole market does as well.

2:51 So our attention to detail, the level of precision, is job one, and that's the same ethos that we've taken as we've embarked on tokenizing the US. Yeah.

3:00 And I remember the headlines once that first, uh, came out and people started talking about DTCC tokenizing $100 trillion plus of assets.

3:09 How much of that do you realistically expect bringing on chain, and over what timeframe? Listen, I would like nothing more for everything to flip over and become tokenized.

3:21 Uh, the reality is, uh, the market is gonna follow its own pace, and our job is to make sure that whenever they're ready to start to tokenize because it matches a use case they're interested in or it matches a strategy they are willing to pursue, they can rely on DTCC to be there to support them on that digital journey.

3:38 Mark, I think the uptake will be, will trickle in in the beginning.

3:41 I think it will be slower than I would like it and you would like it to be, uh, mainly because most of the market is still not ready to embrace this holistically.

3:51 So I think what we found out on July 15th is there are firms that are more ready than others.

3:56 Uh, there are firms that are more comfortable operating in bringing TradFi and DeFi together, or institutional DeFi as we call it, so, and others are not, right?

4:05 So I think it's gonna take a while, and that is really the hypothesis upon which DTCC has built its tokenization service. We know not everything's gonna tokenize.

4:14 At least it won't tokenize at the same rate or at the same time. So that's why it's really important to be able to handle the old and the new, uh, to- together in this, with the same level of care.

4:25 Listen, there's, there's a lot of different, uh, tokenization methodologies. A lot of people are tokenizing things left, right and center.

4:32 But what's really important to always keep in the back of your mind is this $114 trillion that we have in custody today are real assets. They exist today. We're not creating new assets. We're not doing any...

4:44 I mean, all we're doing is taking the assets that we have, ensuring that they continue with the same legal and regulatory representation, the same investment protection, investor protection, and that they could be used unchanged so an investor would like that.

4:57 So the last piece I'll say, which is really important, is we are, we are doing all we can to work with the industry, uh, to facilitate, uh, and increase adoption.

5:06 But at the end of the day, it is the, the tokenization occurs at the request of the DTCC participant. It's not just us hitting a button and c- and, and tokenizing everything.

5:15 So that, that's why I believe it will take a bit of time. Yeah. No, what, what you're saying is very important because, as you said, we hear tokenization left and right today.

5:25 Robinhood came out with its own chain tokenizing stocks. Again, tokenizing in different forms.

5:31 We have wrappers, we have real tokenized shares, but what you are speaking about is real tokenized shares that are now brought on chain, correct? That's correct. These are real assets that exist today.

5:44 They remain in the custody of DTCC. We convert them to a digital token whenever, uh, a participant desires to do so.

5:52 And what's really, what's really important of some of the characteristics that we built into our tokens is really critical.

5:59 We're using the same CUSIP for both the traditional and the digital asset, and that is really to help ensure that we don't fragment liquidity, which is, which is key, right?

6:08 The other thing, it's really important to allow the investor the option of either running it in a traditional sense.

6:14 You may need it, you may need it in digital reasons for programmability, p- composability, which is really important.

6:20 But after you do all your work here, you may need to flip it back to da- to traditional or vice versa, so the DTCC token allows you the ability to do that. Those are really important factors.

6:30 But again, I wanna stress we're not creating new securities. These are securities that operate, that are, that are held in your portfolio, my portfolio and everybody else's, that, that have exposure to the US market.

6:41 And Nadine, before we go deeper into how this actually works, I wanna take a step back. Your company, Securrency, was bought by DTCC. You al- already started building something like this.

6:53 Could you just take us back onto that journey and tell us what went on in your head, and why did you think that this is a good idea to put securities on chain?

7:04 Well, we, we very early on, and it's more our founder at the time, who's currently still with DTCC, his name is Dan Doney, he's the-- also the chief technology officer for digital at DTCC.

7:15 And Dan started with a, with a principle of wanting to de- democratize finance to the extent that we could.

7:22 He also wanted to ensure that the, the US market, we, we fully respect the fact that we have the deepest, most homogeneous market in, in, in the world, but it could also use a, a slight refresh, if you will, on the rails that it was operating on.

7:37 And that was the journey Dan embarked on. It was based on first principles of compliance. He was the first one to token, uh, to, uh, to patent the concept of a compliance-aware token.

7:47 We wanted to make sure that everything that we did, whether it's our infrastructure, our tokens, the, the way we, uh, process data, was all enshrined, uh, in current rules and regulations in the legal framework.

7:58 The partnership with DTCC became really attractive when you look at the scope of our ambition. Our ambition wasn't just to run a platform, right?

8:08 We have a lot of successful entrepreneurs out there that have been very successful in running a platform. Our desire and our ambition was a lot grander, which was, can we make a lasting impact on the US markets?

8:19 And we realized, um, as a fintech, uh, we could have the best technology on the planet, uh, but if we didn't have that really intimate know-how of how markets operated like DTCC, if we didn't have the credibility with clients and the regulators like DTCC had, it would be a little bit difficult for us to be able to do that.

8:38 We would've been successful in our own right, but, uh, I would equate us to one of the platforms you mentioned earlier versus being a market infrastructure.

8:45 And that is where, uh, Dan, uh, the founders at the time, me and all of us, really wanted the ability to become digital market infrastructure, and the only way to do that, uh, really was a partnership with DTCC.

8:58 And we're very fortunate to have been able to, uh, come together and hopefully the market saw the power of when you bring, uh, know-how, credibility, um, a good legal regulatory structure behind you and phenomenal technology, when you marry them together, you get what we're trying to introduce into the markets today.

9:15 So, while alone, it would've been a long, lonely, tedious road that may or may not have led to success.

9:21 Being part of DTCC ensured that, uh, the whole world can see how tokenizing the US markets will lead us to a much, uh, more efficient, deeper ecosystem and, uh, and we're well on that journey right now. Yeah.

9:35 And the market definitely sees the power.

9:37 I mean, over the course of the last year, I saw headline over headline of what you guys are building, and, uh, it seems like you're, you're progressing and you're on your timeline, uh, to reach your goal to go live in October this year.

9:52 Over the course of these announcements, I also saw different blockchains being mentioned, such as AppChain and Canton and Hyperledger Besu and Chainlink and Stellar and many, many other, uh, technologies.

10:06 And I remember last time when we had a conversation, you told me you are technology agnostic Can you just expand on that a little bit and explain us how do you think about these different chains, and what role do they play in your ecosystem?

10:20 It's a great question, Mark. We're blockchain agnostic, and we are asset agnostic, which is really important.

10:25 So while today we're focusing on the assets that have been prescribed in the no action letter, we've got the ability, the platform could support anything from crypto to privates to real estate to, to, to anything.

10:36 Um, and we believe over time all that stuff will come on chain, uh, all these assets will come on, on chain. The first hypothesis we have is, is, is twofold. If you look-- Let me start with DTCC, right?

10:47 We, we are owned and governed by our participants, and we were really created to deal with infrastructure issues so not every single firm on Wall Street had to create the same infrastructure to do that.

10:59 And this is-- goes back to the nineteen seventies when, uh, there was something in our history called the paperwork crisis, uh, that, that occurred then. And listen, history, most, most of the time repeats itself.

11:11 So now when you, uh, fast-forward fifty-five years later, we've got this new digital infrastructure that's emerging. And a lot of people have gotten frustrated, right? Because this is not new.

11:20 Blockchains have been floating around for the past ten years, if not longer.

11:23 People have been building different infrastructures, and what we saw is it sort of fragmented a market that's known for being homogeneous and very efficient.

11:32 The entry of DTCC into this slot allows our participants to rely on a trusted partner to, to, uh, provide for a shared blockchain infrastructure, and that's what we're doing.

11:42 Now, we talked about the volumes that we process. A hundred and fourteen trillion dollars under custody, uh, four quadrillion dollars in settlements.

11:50 Uh, you know, I don't know how many millions, uh, of, of corporate actions we process.

11:53 And as the technology stands today, today, that doesn't mean it'll always be like that in the future, we have not found one blockchain that could be, uh, the end all, the be all, end all to everything.

12:05 Now, someday that will happen, but for the immediate future, and what's really important is that we can't let the good be the enemy of the great or vice versa. I always forget wh- how it stands.

12:14 The, the point is, we need to keep moving. We need to keep moving. We need to inch towards progress.

12:18 So our response to that is to curate a carefully selected group of blockchains that deal with specific use cases, but most importantly, they were directed by our clients.

12:29 So if you recall, Canton was the first one out of the gate because our clients asked for that, but it wasn't the last one. You saw Stellar come on board. Baseu, we've always had internally.

12:39 We've, we've announced Ark, and I think we'll announce a couple more, hopefully between, you know, the time of the launch into the new year. Not now everything will be ready at the same time.

12:49 Um, and we'll continue to work with our clients to make sure that we've got the right level.

12:54 I mean, literally every day, Mark, I get two or three emails from people that I don't know that will say, "Hey, Nadine, uh, can we-- can you take twenty minutes and talk to us? We've got this amazing blockchain.

13:05 It walks on water. It makes everything great."

13:08 And we do talk to almost everybody that we can because we wanna make sure we leave no stone unturned, and that we make sure that we deploy the best architecture, uh, that we can f-for, for the market.

13:19 We do have our screening processes in the background. We've gotta make sure that very simple things like AML, KYC, there's nothing funny happening on these chains.

13:27 And then we've also got performance and other issues that we look at. But so you've got this nicely curated list of L1s and L2s, and where DTCC is managing this is think about us as a systemic orchestrator.

13:39 We're now moving these assets. If a client wants to move their asset shares from, from Canton to Stellar or vice versa or wanna move them on Baseu, we could do that for them in a way that's safe and secure.

13:52 Also, that is half the battle. The other half-- The, the other half of the battle is the quality of the data, right? No two blockchains handle data the same way.

13:59 So if we're gonna process corporate actions on chain, if we're gonna use that data, uh, for a bank to strike an NAV, you need the data to be well curated, um, and, and, uh, and, and settled in a way that it, it would make sense.

14:11 So that is a role that we're emerging try to, to try to play, and you don't need seven hundred people to, you know, continue to curate these, um, blockchains.

14:21 It tells you that this is a role DTCC can play, can play well on behalf of its participants. Now, that list will grow. I can't tell you, Mark, if it will be ten or fifty or a hundred.

14:30 It will all really depend on the various use cases, the depth of liquidity on these chains. But first, second and third, it depends on where clients wanna go, and we wanna be able to facilitate that.

14:41 So that is the most important part that we can use with these blockchain. We're not picking winners or losers. We're simply working with the market through our advisory boards to pick, uh, the best fit for them. Mm-hmm.

14:53 And, and how do you coordinate with other market participants such as, for example, ICE and the New York Stock Exchange who work with Layer Zero to build their own trading infrastructure?

15:04 How closely are you collaborating with them, and, and how would that eventually all be interoperable with each other? It's an awesome question, and I hope July 15 gave you a glimpse of what that would look like.

15:16 So while July 15 was a, was a one-day event, if you look very carefully on how we structure it, it was a really good microcosm of the industry.

15:24 So we had traditional providers like Nasdaq, like NYSE, and we had new emergent providers like Ondo.

15:33 Uh, and, and, uh, you had the traditional guys like Broadridge, and you had JP Morgan, and you had new, uh, new providers.

15:39 So we wanted to show a cross-section of what the new reality looks like, which is a combination of traditional Wall Street firms and new emerging digital players, uh, that, that were part of that.

15:51 I think you'll also remember, and I can't remember exactly the date, but it was sometime in April, March, right around Consensus, whenever the Consensus conference was.

16:00 We also announced the setup of, uh, two important setups. One was the, the tokenization services of DTCC that are housed within our depository.

16:09 But I'd say the most also the equally relevant was the setup of multiple industry forums that are administered by our tokenization team to really take in, uh, the feedback from the market, and I'm telling you, it is probably the most popular forums we have.

16:27 Uh, there's not a day that we don't get requests from new providers, old providers that wanna be part of these client advisory boards, and that is where we keep our pulse on the market.

16:36 And then we've got deeper partnerships with some of the, uh, players that you just talked about. Obviously, um, you know, we need to be close to Nasdaq and New York Stock Exchange.

16:44 They're the pillars of the traditional, uh, marketplace.

16:47 But we're as close, uh, to all our participants, as well as these new fintechs, uh, that you remar-- that you've talked about, whether it's Stellar, it's Cantor, and it's, uh, Broadridge, it's Blockdaemon, it's Fireblocks.

16:59 I mean, the, the list is endless, and which makes our jobs today, like now that the foundation is built, it's really one of listening to the input that we get from the market and figuring out how do you-- how of out of that you deploy an, an, a digital ecosystem that makes these tokens more valuable and useful for clients because they've got a purpose now.

17:19 You can, you know, once they're in your wallet, as you know, you can move them twenty-four/seven, but if you wanted to trade them, you could do so.

17:25 If you wanted to move into any institutional DeFi platforms like Aave or anybody else, you could do that. If you wanted to move them from chain.

17:32 So our job now that sort of the hard part, there's still a lot of building to do, don't get me wrong.

17:37 But the-- now that the foundation that we're is in-- it needs to be, it is really partnering with the market to better understand their needs, and the needs are how can you trade more efficiently?

17:47 How can you get more yield for your client? How can you simplify and manage your risks?

17:51 And then working through that work, we're, we're working with the industry to deploy an ecosystem that we hope will be useful to them. Makes sense. Yeah.

17:59 Nadine, you went live with the first, you call it pilot or live production trades on tokenized treasuries and equities in July this year, and now you're planning to go live in October.

18:11 Can you explain us that timeline a little bit? What actually happened on July 15th, and what will happen in October, and are you still on track, and what's gonna happen in October? All right.

18:21 So we are as of, what is today? Tuesday, September fifteenth at two thirty in the afternoon, [laughs] right? We are still on track, right?

18:29 I don't know what the next thirty minutes will bring, but we are still on track, and we're look-looking for a launch, uh, in, in October.

18:35 And I wanna be clear, like they're a bit different from what we did in June and what we're-- in July and what we're doing in October. In, in July, as I said, we wanted to test the platform.

18:44 We wanted to test the market readiness. We wanted to make sure, like to understand, like, like do all the wallet providers fit in nicely? Do they perform well?

18:53 Because they perform in one way, uh, when you use a sandbox, and then when you're using real-life, uh, production trades, do they work the same way?

19:00 We, as, as you know, we also had other, other trading venues included in there. So it gave us a pretty good idea of how the world will operate. Come October, Mark, it becomes a real product, right?

19:12 So it's not like, I mean, people may decide to onboard on November or January of next year.

19:17 The-- in whatever it suits them and it suits their investment needs, they can, they can just call, call us up, say, "Hey, we're interested in onboarding."

19:26 That we hope would be the, uh, processing of any corporate action related to the treasuries on chain.

19:31 We hope that to occur in October, and then we'll continue to fine-tune it with equities and other things that would go there. We want to make sure we get some feedback on the feel and look of the platform.

19:42 We've enhanced it. It's really important for us to provide our clients with the best client experience ever. And honestly, one of the feedback we got was, "Wow, this is as easy as moving med- money on Venmo."

19:54 And that to us was the biggest compliment, that you could take something so complicated and so complex behind the scenes, and I think its strength, it's, it's, it's simplicity.

20:03 So we will continue to invest in the client experience as we move forward. We've been looking at other chains, adding more capabilities to the process.

20:11 And remember, within DTCC, we're probably the only, only provider out there that's giving you the old and the new, right?

20:18 So if you go in and you've got ten thousand shares of Apple, but you go, "Nadine, I just need a thousand to be turned into, uh, digital," we're still showing you ten thousand securities.

20:27 We're showing nine thousand in digital-- I'm sorry, in, in legacy, one thousand in digital. So as, as the owner of these assets, you know exactly where your assets are.

20:37 You know exactly by the minute, right, like how that change in ownership is occurring. And to manage risk, you've got full, uh, full insights into the exposure, um, of your assets.

20:48 So that is-- that sounds more trivial than it is. Uh, but if you think at the heart of what we're doing, we're marrying Web3 technology with blockchain technology.

20:59 I'm sorry, with, with, with mainframe technology and making it a seamless, uh, process to our clients. So that takes a little bit of a lift and, uh-- but we're ready.

21:08 We're looking forward, uh, to, to the launch in October. Mm-hmm. Yeah. So, uh, marrying Web3 with mainframe. In, in October is the full launch. Let's break this down even more.

21:20 So for a treasurer or an allocator listening, what actually changes in their lives, and what can they do better, faster, or cheaper in October 2026?

21:31 Well, it depends on their aspirations, Marc, but in, in real term, it's a very simple process of either via an API or a client interface, you would give us directions to tokenize something, whatever that something is.

21:44 Now, the good news is that something, take Treasuries, it gets tokenized. That, that underlying custody never leaves DTCC. You don't have any legal uncertainty. You're inheriting really the framework that works today.

21:58 So from that perspective, nothing changes. They've just taken assets that they've held in an account at DTCC, have been able to digitize it, and put it in a wallet that's theirs.

22:10 Now, from there, there's new possibilities they can use. They can use that, that Treasury to use it as collateral. They can use it as backing into a stablecoin.

22:20 They can use it, uh, to execute, um, DeFi strategies, uh, that could get them more yield. So it is programmable, it's composable.

22:28 And I saw somebody wrote a line, Marc, somewhere where a traditional Treasury is you, you park that money in an account, right? You take your money, you buy Treasury, you park it in an account.

22:39 Once it moves into a digital format, right, you could s- you're, you're earning money.

22:43 You're making that tre- that, that asset sweat for you while it's still parked at DTCC in a, in a, in a reasonable- in, in a, in a secure, in a secure, uh, wallet. So that is what changes.

22:55 It's their outlook as can they do more with that asset, um, and they could do it better, faster, and more efficiently in digital format.

23:03 But hey, if they decide they don't want anything in their life to change, they can either leave it alone and not digitize, or they can digitize and put it into a wallet.

23:12 Um, and then that wallet could, could, uh, could trade 24/7. The most-- the easiest ex-example I can give you is for, you know, clients that execute on, in, in, in Asia, uh, when, when our markets are closed.

23:27 In tomorrow's world, if they have Treasuries in their wallet and they need to execute a, a financing trade against those Treasuries, it would be a lot cheaper for them to extrapolate those, uh, those Treasuries from that wallet and execute versus either, A, having to wait for us to get up and do it, or B, having to go on the market and converting collateral in order for them to finance that.

23:47 So if you think about that, their cost of capital's cheaper, their nimbleness to be able to take advantage of a particular trade at a particular time is now something that's no longer science fiction.

23:58 We just don't talk about it. It is, it is reality. Yeah, it is reality. It seems like we've been talking about this for- Forever... over 10 years. Yeah, for-forever, yeah. Uh, so it's gonna be reality in October.

24:11 That's great to hear, and it, it seems like it's an incredible unlock for, uh, your clients.

24:18 How does this pitch to potential clients and future users of that platform look like, and how receptive are these people to that new reality? To be honest with you, I wouldn't call it a pitch.

24:31 Our participants in the market in general, I think there's a really genuine level of excitement and curiosity over digital.

24:38 And as I told you earlier, on July 15th, we've realized some people are, um, a little bit further down the journey than others.

24:45 And our role really has been to leverage our, our trusted market position to really help people think through the implications that unlock, as you called it. It's not for everybody, right? It's really not for everybody.

24:57 And, uh, over time it may be, but in, in the onset, like I-- you really need to have a pretty good use case.

25:03 You need to be able to be willing to sometimes cannibalize your original business by thinking through the impact to your distribution channels, to your operating model, to your investment, y-your risk appetite.

25:15 So it's not a matter of just converting something or going out and acquiring a wallet.

25:20 There's a bigger, a bigger thought process that goes with it, and I'm very proud of the work that my colleagues have done on the digital asset services side, where working through these, uh, client advisory boards, we've been able, uh, to have these conversations, right?

25:34 Like Marc, we-- we're always criticized about, you know, atomic settlement. Well, atomic settlement is great, okay? It's awesome.

25:41 But how do you-- there's not enough money on the planet, you've heard me say this a million times, to be able to do a gross settlement for $4 trillion, uh, $400 trillion. There isn't.

25:51 But through these committees right now and these client advisory boards, we are debating, like, what is the best way to do that? And I think the answer is, there's gonna be room for a lot of things.

26:02 There's gonna be assets that are just for atomic settlement, and we'll do that. There's gonna be stuff that maybe there's different modalities of settlement, right? Maybe there's settlement on demand, right?

26:11 The, the choices are there, and we as, you know, one of our secret powers or whatever you wanna call them, is our ability to gather the industry.

26:21 And our activities are not just attracting participants in the US markets, but they're really global in scope. They're investors, they're fintech clients, they're, they're all from all walks of life.

26:31 And don't get me wrong, there is a lot of opinions. A lot, a lot, a lot of opinions. But that's all good because- Yeah...

26:38 it's these differences of opinions that DTCC's uniquely set up to figure out what is that common denominator and then progress. And again, it's not gonna be revolutionary.

26:48 It'll be evolutionary as we move that forward, and that's how we're thinking about it. So we're engaging every day, every minute of the day.

26:55 Um, honestly, when we all go home at the end of the day, I think we all go into a cone of silence for a couple of hours 'cause we just talk all day long, but it's good.

27:03 We're, we're, we're be, uh, we're able to educate, we're able to evangelize, but also we're, we're honest brokers. Like, there, there are people that would call me and say, "Hey, we wanna tokenize a money market fund."

27:15 And I'll go, "Awesome, we can help you. But if you don't mind, can I ask you why you wanna tokenize a money market fund?" And they're like, "Uh, we're not quite sure, but everybody else is doing it," right?

27:24 And listen, it's easy for me to say, "Sure, no problem. Let's do it." But the approach that we take is like, all right, let's think through this. Does this really make sense for you, for your clients, for their clients?

27:35 Uh, and sometimes the answer is yes, sometimes the answer is no, and if the answer is yes, we walk them through and help them figure that out. Sometimes the right answer isn't DTCC, it's something else.

27:44 Or sometimes the right answer is like, "Don't do it, 'cause it's not worth it." And as long as we continue to do that, I think c- you know, we'll, we'll move towards adoption in a very purposeful and meaningful way.

27:56 Yeah, that's fascinating. And, and you mentioned atomic settlement, and, uh, atomic settlement is not only a question of feasibility, it also is a question of market structure.

28:05 And, uh, you said there are a lot of opinions out there, and I, I know that one opinion is that atomic settlement and twenty-four/seven markets could amplify the liquidity strain in a stress event.

28:18 How do you weigh that against the efficiency case? I went off on a r- long, long answer before, and that's part, Marc, of the, of the thought process.

28:27 I, I don't know if they create more risk, but what, what it really creates... So if you think of what allows us to buffer the risk is time sometimes.

28:37 Time is an important element, is an important risk management feature here that under atomic settlement or twenty-four/seven, we lose those buffers, right?

28:45 So usually-- So that is what we need to think through as a, as an industry.

28:50 So it's not the atomic settlement per se or the twenty-four/seven per se that's, uh, creating these, uh, these additional stress or strain on the market. It's the fact that we've taken out these, these buffers.

29:02 And I know it's a subtle difference, uh, but usually, like, I'll make it up, in a batch environment, we still have a bit of time to recover. In an always-on twenty-four/seven, there is no time to recover.

29:12 And the issue is, no matter how good we are, how great the technology is, there is gonna be issues. There's always issues. There'll always be issues.

29:20 So, but time, which is a really shock absorber, a problem absorber, that is one of the concerns we have. The other one is the stress moves more instantaneously, right?

29:31 Like, when you get a blip somewhere, you're instantaneously gonna feel it somewhere else. So this is why it is re- and, and you lose l- netting, as I made the point about earlier, right?

29:41 So in netting, I mean, you look at us, we're netting at what, ninety-eight, ninety-nine percent efficiency. That's really hard to replicate.

29:48 So we believe in working in partnership with the industry and the broader industry. We will find the right balance, the right configuration. Do I have an answer for you right now? I don't.

29:57 I do know right, right now it's not a great idea.

30:00 But I do believe that as we work through this, think through-- and this is where a firm like DTCC, which is market infrastructure, could figure this out in partnership with its clients, and, and we'll get to the right answer.

30:12 Nadine, you came into this field with a vision, with an idea, and now we're along that journey. How do you think the financial infrastructure marketplace is gonna look like five or ten years down the road?

30:26 How would you conceive that in an ideal world?

30:29 I'm one, and this is why we felt very comfortable, uh, partnering with DTCC and selling to DTCC, is we do believe the role that DTCC has in the market will, will continue for the next foreseeable future.

30:42 A lot of, uh, a lot of firms are running around out there saying, "Oh, we don't need market infrastructure. We don't need this and that," the other thing.

30:48 So I believe the role of market infrastructure as we move forward will evolve.

30:52 It won't stay exactly the same, 'cause for all the reasons we j-just talked about, like clearing, uh, will be diminished in the future, but you still need settlements. You still need a good control location, Marc, right?

31:04 Especially with the proliferation of different blockchains out there. How do you know what exactly Apple issued, right?

31:10 If, if somebody can go in and tokenize Apple shares, and you can tokenize those, and you can move them on millions of blockchains. So the role of market infrastructure continues to be incredibly important, to be the...

31:21 We've always been the record keeper of the United States. We'll now add, we'll also be the digital record keeper of the United States, and that will be important.

31:29 So our ability now to track things in real time will be critical. To be the good control location will be critical. To be that systemic orchestrator will be critical.

31:37 To ensure that tokenization is done right, to be the champion of interoperability, because interoperability is more than getting two chains to talk to each other. It's about standards. It's about data.

31:49 It's about a framework that works for all. So, and you need a neutral party to be able to do that, a neutral party with very little commercial interest of who wins or who loses.

31:58 You know, we're at the service of the industry. Our ownership allows us to do that. So I do see our relevance continuing into foreseeable future, but our role will evolve and won't stay static.

32:09 Nadine, just before when I asked you w-whether you're still on the timeline, and you said, "If everything stays the same in the next minutes, yes we are." Right now, as we speak, is the vote on the CLARITY Act.

32:20 How does that influence what you- I know. I'm looking at my TV here. To be very honest, for DTCC, it, it, it's not gonna change our direction.

32:28 We've, uh-- and this is what our no action letter has provided us, is with the fact that we're using the same regulatory and legal framework.

32:35 So within, within our, you know, within what we've set out to do, we've got the clarity that, uh, that we've requested.

32:43 Our clients can have the peace of mind of, you know, these assets will always have the same legal and regulatory framework.

32:49 But clarity as a whole would be really important for our industry, for the position of United States, uh, in, in this industry, um, and we'll see where, we'll see where it ends up.

32:59 But, uh, we've made great strides in these past eighteen to twenty-four months as, as a, as an industry, as a country.

33:06 Yeah, so once this podcast comes out, we'll know more, and we'll definitely stay tuned and look forward to what's happening in October with DTCC.

33:14 Before we close the show here, we'll do a short lightning round, short questions, short answers. And the first question is, tokenized Treasuries or tokenized equities, which one is bigger by twenty twenty-eight?

33:27 Treasuries. Then next one, atomic settlement, overrated or underrated? Oh, you're gonna get me in trouble here. I, I think, I think it's rated just fine.

33:37 We, we, we do, we n- do need to move through it, but it does have its attributes. There won't be one blockchain to rule them all. How many chains actually matter in 2030?

33:47 Honestly, Marc, that's gonna be hard to figure out. It, it's a couple things. It's we still have this public versus private permission, permissionless debate that needs to get settled.

33:57 Uh, but it's gonna be one of where institutional investors are gonna be comfortable. Uh, that's gonna be hard, but for the sake of the li- lightning round, I'll, I'll, I'll say 25. Yeah.

34:06 Then, uh, the biggest misconception about DTCC. Biggest misconception.

34:12 Hopefully, um, you know, people sometimes view us as a quasi-government agency, but I hope through our work that we've done, whether it's been T- T+1, uh, treasury clearing, and definitely on digital, we've shown that DTCC can be a leader and innovator, and working together, we're, we're, we're, we're changing markets and making history.

34:31 So hopefully that, that clears our, our perception a little bit. Mm-hmm. Mm-hmm. And then last one, one book, idea, or conversation that shaped how you see the world. Hmm.

34:42 I, I would say, uh, one, one of the books I really like is Sapiens. I don't know if you've ever read that book.

34:48 It's a big book, uh, and it's pretty thick, but what I like about it, it sort of breaks down humanity in four different cycles and, and it sort of tells you how, like, how the world has evolved from the, the earlier days into, into the later days and what brings us together as, as a, as a community.

35:04 Now, whether you believe in it or not, I don't know, but I found it a fascinating breakdown of how humans operate, societies and civilizations evolved. Um, and that's...

35:12 And sometimes you wonder whether we should go back to simpler days. Yeah, right. Right. But, uh, I'd say Sapiens is one of the better books I've read in a long time. Yeah, that's great. We'll link that in the show notes.

35:23 Sapiens by Harari. Definitely recommend it. Um, Nadine, we're at the end of the show. Thank you so much for joining- Oh, thank you so much. I-...

35:29 and shedding more light on your work and what you're doing for the industry. Uh, I think many, many people will find that very useful and appreciate your time. Likewise. Thank you so, so much.

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