"DCV Digital" is the project that guarantees high-security standards for the instrument issuance processes.
Innovation is a key factor in the development of new technologies that Depósito Central de Valores (DCV) is leading in 2023. Due to this, DCV and the Central Bank of Chile, the main issuer of financial instruments, decided to take a step together to develop a project called DCV Digital with Nasdaq.
It is an agreement through which these entities explored the feasibility of moving forward in the issuance of digital assets, considering issuance, administration, and buy-back stages, using DLT technology, known as Blockchain.
DCV Digital is a strategy to build a base infrastructure that includes these assets and that allows their digital issuance, considering the development of future solutions that include other parts of instruments' life cycles and the incorporation of other assets.
"We want to become a relevant player in digital assets custody to provide an applicable service that helps reduce risks and improve instruments issuance processes," explained Rodrigo Roblero, General Manager of DCV.
This is why they decided to move forward with their world-class technology partner. "Nasdaq provides a great level of support, knowledge, and investment in research. Continuing our collaboration with them after the go-live of DCV Evolution was a logical step given the native compatibility of their products," he stated.
This was part of an assessment period that started with the design and validation of a preliminary conceptual model and then moved to a detailed analysis and design process. Today the process is in its construction stage.
"The DCV Digital project strengthens our relationship with the Central Bank in the ongoing quest to modernize services for the securities market by leveraging new technologies," expressed the General Manager.
"Including Citi as part of our infrastructure allows us to access more markets," explains Claudio Garín, Business and Customer Experience Manager at DCV.
DCV became part of the regional custodians' system in a partnership with Citi Securities Services, one of Latin America's main service providers for securities depositories (CSDs).
Over the last seven years, Citi has played a key role in supporting crossed-listing programs of the CSDs in the main markets, including Brazil, Mexico, Chile, Colombia, Peru, and El Salvador, promoting intermediation activity in national capital markets and access to global securities.
DCV became part of this network, and Citi Securities Services will become an international securities custodian for the local market. The transition of the financial instruments took place successfully on May 26.
Through the large global network of Citi that comprises more than 100 markets, DCV will be able to provide its depositors more and better access to the global market. The extended relationship will allow the clients of DCV and its direct participants to leverage new services from segregated accounts, FED settlement, transactions clearing (intermediation), tax services (qualified intermediary), and American mutual funds investments.
"Including Citi as part of our Cross-border Custody infrastructure provides us access to more markets and broadens our value-added services offering for our clients. We also expect to achieve important short- and mid-term efficiencies through automated processes (STP) which translate into expediency, lower operational burden, and reduce potential errors," says Claudio Garín, Business and Customer Experience Manager at DCV.
"Expanding the relationship between Citi and DCV reflects the commitment of more than 30 years of Citi with the Latin American region and our experience in creating solutions to address the needs of central securities depositories," claims Ricardo Hesse, Director of Securities Services of Citi for Latin America.
The World Forum Conference of Central Securities Depositories (WFC) takes place every two years and gathers the world's most important players of the market.
In the meeting, the most important topics for the securities industry (CSDs) in the world are discussed, and it is organized by the World Forum Conference of Central Securities Depositories (WFC). This year the meeting was held from May 24 to 26 in Prague, with representatives from the regional associations of depositories from Asia Pacific, America, Africa and the Middle East, Europe, and Central Eurasia, as well as regulators and other capital market actors.
Guillermo Tagle, Chair of the Board, Rodrigo Roblero, General Manager, and Javier Jara, Legal and Corporate Affairs Manager, attended the meeting representing Depósito Central de Valores (DCV).
The meeting aims to provide an instance to cooperate and discuss the most important topics for the industry with different leaders of Central Securities Depositories, regulators, central banks, international banks, local authorities, and custodians from around the world.
"It is very important to participate in international events to stay current with world trends and provide the best service to our clients." One of our objectives is to look for new businesses and innovation," explained Guillermo Tagle.
Rodrigo Roblero added, "Depositories all over the world must exchange experiences to face the industry's challenges and become better prepared for the new needs of our clients."
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Javier Jara said, "It was interesting to see the business development experiences the different countries are promoting to develop their securities markets.
The topics addressed in the WFC included the facilitation of cross-border investment flows, learned experiences and the challenges of the DLT technology in pilot programs developed by FMIs, settlement processes efficiency, global post-trade vision, and the systemic risk in post-trade.
"Clearly, the experience of being part of this event has been useful to understand the challenges that the industry to which DCV belongs is facing, notwithstanding the great challenges that we have at a local level," concluded Roberto.
Market leaders analyze the path traveled by the industry over the last three decades
Chile's GDP grew 5.3% in 1993 when President Eduardo Frei Ruiz-Tagle took office; José Antonio Guzmán was President of CPC, and the well-known economist Roberto Zhaler led the Central Bank. That year, when the legal age changed from 21 to 18 in Chile, Depósito Central de Valores (DCV) was created due to one of the greatest digital transformations experienced by the Chilean capital market, with the clear mission of receiving public offering securities deposits and facilitating their transfer through a register system model. All this under the highest transparency, security, and efficiency standards.
Fernando Massú
The capital market that DCV has served has undergone significant changes over the last three decades while the company continued its development process to move along with it. Fernando Massú, President of BTG, highlights some of these changes: "The growth of the market (in terms of size and strength) by incorporating financial institutions other than banks that can compete in the savings and loans arena. Currently, people and companies obtain funds from sources other than banks, such as insurance companies, department stores, compensation funds, factoring companies, and leasing companies, to mention a few. Local banking funds approximately 50% of the companies needs, and around 70% for people."
María Eugenia Norambuena
María Eugenia Norambuena, General Manager of Principal AGF, states that the market's growth is strongly related to its regulatory framework. "The main milestone of these 30 years has been the development of a sophisticated regulatory framework for the financial system, which has allowed for its growth providing safe conditions to those that use its benefits, such as savers and investors." Massú points out other significant breakthroughs. "The creation of products such as the RUT account (bank account provided with a Taxpayer ID number), debit cards, and credit cards have promoted banking usage within a large part of the Chilean population. The savings kept in AFPs and life insurance companies provided access to loans and mortgage loans under excellent conditions to a great part of the population."
María José Montero
Challenges
Regarding future challenges, the Director of the Chilean Association of Investment Funds Administrators, María José Montero, says that "it seems evident that we must make sure to protect a growing and transparent capital market that operates efficiently playing its role in the economy by mobilizing savings and providing liquidity to promote an emerging economy. It is also imperative to move towards a more sustainable financial market: We have the opportunity to play a more active role in solving the social and environmental challenges we face globally." María Eugenia Norambuena addresses the same issue: "The challenge is to educate people on the business to see that they can leverage all the advantages and opportunities that we provide as a sector for the lives of Chileans."
Juan Carlos Chomalí
Juan Carlos Chomalí, President of AFP Capital, adds, "it is key to protect the institutionality for the financial market to continue growing and supporting the development of the Chilean population."
"DCV continues providing trust and transparency in the custody and settlement of securities, creating new ways of helping our clients with their challenges." Rodrigo Roblero Arriagada.
In this context and after three decades of providing services to the local financial system, DCV intends to continue being a key player in supporting the market. The digital transformation process that started with the creation of DCV has continued. Recently, this company strengthened its technology infrastructure by deploying a world-class platform. "DCV, in its role as a supplier of sound infrastructure for the development of the market, will continue contributing with trust and transparency in the custody and settlement of securities, creating new ways of helping our clients with their challenges and the different upgrades promoted in the market," states Rodrigo Roblero Arriagada, CEO of the Company.
"It is about digital transformation, innovation, risk management, and the continuous improvement of the business platform," said Rodrigo Roblero, General Manager of DCV.
As every year, the depositors of Depósito Central de Valores (DCV) got together to hold the XXVII Depositors' Meeting. With the presence of the Surveillance Committee and its participants, Rodrigo Roblero Arriagada, General Manager of DCV, took the opportunity to present four lines of work in which the Company will place its efforts for the 2023-2024 period.
In 2022, the Company's efforts were placed in the new DCV Evolution (DCVe) platform, which is excellent leverage for developing the Company and the capital market. "We have taken a step forward in technology transformation and are currently seeing good results in terms of stability and processing times. However, in 2023 our main focus is to continue strengthening our services even more," said Mr. Roblero.
This way, our work focuses on continuously improving the DCV Evolution business platform. "After the successful go-live, we must continue strengthening and improving the platform. Four new releases have been defined to improve the Company's performance needs."
Secondly, risk management is a topic that DCV has engrained in its DNA since its creation. "We know the importance of what we manage; that is why we are working with other infrastructure companies (FMI) to have the same perspective on how to face operational and cybersecurity risks collaboratively." Similarly, he ensured that the Company will continue promoting practices to keep its high standards of service availability and improving the responses that are part of the business continuity plan.
In 2021, the Company started identifying opportunities to enhance the efficiency of its relationship with its clients. In this line, the third pillar is focused on the digital transformation process that intends for those interactions to be more efficient in the market.
The fourth line of work is innovation, which was presented as a key component for developing new technologies. "We proudly say that we have been working on a project called DCV Digital with Nasdaq, to develop the first DLT technology (Blockchain) processes."
Finally, Rodrigo Roblero said that all changes will have the Company's clients at the center: "Last year, we underwent a deep internal restructuring process to strengthen the relations with our clients to develop new opportunities and to address the improvements required by the market. And this is what we expect to continue reinforcing."
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