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An industry initiative launched by a consortium of leading US financial institutions has demonstrated the potential for an always-on, interoperable settlement network, promising to streamline multi-asset transactions.

The Regulated Settlement Network (RSN) Proof-of-Concept (PoC), unveiled Thursday 5 December, aims to how tokenised securities and central bank and commercial deposits could utilise shared ledger technology to enhance settlement processes within a financial market infrastructure.

The initiative suggests that shared ledger technology could create a unified platform for settling diverse financial instruments, from central bank deposits to US Treasury securities, in real-time.

Financial transactions are currently processed and settled across fragmented, siloed systems, leading to inefficiencies, increased operational risks, and slower settlement times. The RSN experiment, involving major players such as Citi, J.P. Morgan, Mastercard, and Wells Fargo, aims to address these long-standing industry challenges.

The project demonstrated the feasibility of a 24/7 settlement infrastructure that could tokenise regulated financial instruments, enabling more precise and coordinated transactions. Notably, different asset classes could be settled simultaneously on a common, regulated platform.

On the technical side, the RSN PoC effectively supports precise settlement across multiple asset classes through a shared-ledger financial market infrastructure.

The legal workstream found no immediate barriers to implementation under existing frameworks, though further regulatory engagement will be necessary. The Securities Industry and Financial Markets Association (SIFMA) intends to continue advocating for the concept through industry forums.

A previous PoC, from January 2023, explored the potential of a shared ledger technology called the Regulated Liability Network (RLN) to enhance domestic and cross-border payment systems. The study, which used simulated data and focused on USD transactions, demonstrated the feasibility of a near-real-time, 24/7 payment system that could simultaneously settle commercial and central bank digital tokens on a common platform. 

Technical findings of the 2023 project validated the architecture’s ability to provide settlement finality, a shared source of truth, and enhanced privacy, while the legal workstream found no insurmountable barriers under existing US legal frameworks. The current RSN PoC builds on these results.