MACH Vision
The technology components
Mach technology comprises six core components that target the cost savings, capital reductions and new revenue opportunities of digital assets
Market View
1. Tokenised assets are $87bn today. BCG estimates they will rise to $11 trillion by 2030
2. There are $584bn of digital assets under custody (Statista, Oct 2024)
3. Existing EU law and regulation supports digital assets and digital market infrastructures
4. Settlement efficiency is falling whilst costs are rising
5. End investors remain sensitive to costs for issuance, settlement, collateral and safekeeping
6. DLT has matured and platforms are now being delivered into production
7. DLT offers solutions for collateral mobilisation, real-time settlement and fractionalisation that positively impact cost, revenue and capital
De-centralised digital passports
Links legacy and DLT ledgers via API, ISO and DLT nodes
Assign
Issue, transfer & custody of all assets
Tokenise
Mint, transfer lock & burn
Optimise
Ledger
Conventional, digital and tokenised assets on one ledger
Multi-lateral netting of settlements
Technology View
1. DLT enables a more resilient infrastructure
2. Increased cyber protection, data protection and permissioning
3. New ledger structure increases transparency of chain of custody (UBO, Beneficial Owner etc)
4. Improved latency of information, regulatory oversight and corporate governance for issues (SRDll)
5. Structure compliant with PFMI Principles
6. Interoperable ecosystem – MACH supports ISO messaging, API, public and private DLT networks
Product Development Roadmap
The CSD Vision
Context
Mach CSD is the first product based on the Mach technology components. It has combined five of the six technology components:
Assign
Pass
De-centralised digital passports
Issue, transfer & custody of all assets
Tokenise
Mint, transfer lock & burn
Bridge
Links legacy and DLT ledgers via API, ISO and DLT nodes
Optimise
Ledger
Conventional, digital and tokenised assets on one ledger
Multi-lateral netting of settlements
New Revenue Streams
• Digital Assets: Enables new digital product offerings utilising existing law and regulation
• Fractionalisation: Creates new markets, enhances participation and liquidity
• Tokenisation: Streamlines the issuance, transfer and flexible use of assets
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Reduced Costs
• Settlement: Reduced post-trade fees
• Issuance: Faster time-to-market, fewer intermediaries
• Operations: Increased automation and accuracy. Reduced effort and FTE
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Interoperability
• Existing Tech: Integrates with SWIFT and Target2. Uses API
• New Tech: Interoperates with private and public DLTs
• Controlled Migrations: Supports conventional, tokenised, and digital assets, ensuring a risk managed transition to new technologies
• Single Ledger: Supports conventional, tokenised and digital assets on one ledger
• Data Lineage: Maintains high throughput and low latency, ensuring efficient data processing and tracking, supporting Data Management
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Reduced Capital Requirements
• Atomic Settlement: Facilitates instant settlement, liberating capital held against operational and counterparty risks
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Security & Reg Compliance
• Cryptographic Security: The MACH ledger uses elliptic-curve cryptography to generate key pairs using 256-bit keys.
• Regulatory Compliance and Reporting: Adheres to regulatory standards and provides comprehensive reporting
Cloud
• Platform Scalability and Resilience: Tested to 10,000 operations per second. System resilience through multiple availability zones
• Infrastructure Costs: Utilises cloud infrastructure, minimising physical infrastructure and maintenance costs
Issuance
• All security transactions match against the total number of securities in circulation (i.e. match positions in circulation to investors’ accounts)
• Ensure intra-day + EOD integrity
An overview of end-to-end CSD functionality
Instruction Management
• Capture instructions
• Lifecycle management: identify instruction type and define end to end lifecycle + process
• Validate instructions: check that data is complete, accurate and in the correct format
• Enrich instructions as required
Securities Settlement
• Match upon receipt of a successfully validated delivery or receipt instruction and facilitate the process to compare trade details of the sell and buy
• Position all securities have sufficient cash assigned for settlement to take place
• Settlement: facilitate the end-to-end lifecycle of a transaction, using T2S for all settlement, in Central Bank Money (CeBM):
CSD
Cash Management
• In case of delivery/receive versus payment transactions, the corresponding cash amount must be transferred as well between the participants
• Generate cash instructions
• Process confirmations
Account Management
• Maintain and administrate all financial instruments in a book entry system
• Open and maintain accounts for CSD participants (as well as end-investors) on which balances are recorded in books and records for all securities transactions
• Manage corporate actions and income events related to securities deposited in books and provide the necessary tax services
Data Management
• Ensure that all data related to securities transactions, holdings, and settlements are accurate, consistent, and up-to-date across all systems and processes.
• Implement robust security measures to protect sensitive financial data and ensures compliance with regulatory requirements and industry standards.
• Maintain the overall position of all instruments issued in the market of origin
• Maintain the overall account structures to finalise settlement
Custody Asset Servicing
• Comprehensive new issue services
• Timely and accurate income and redemption payments
• Proactive tax services for both relief at source and reclaims
• Efficient corporate action notification and processing
• Lifecycle messaging for income and corporate actions
Business Architecture and Message Flows
Background
MACH CSD | Business Architecture
Reach out to book a demo of the platform GUI and functionality.
API’s provide read/write functionality and connect; the trading venue, SWIFT, and participants to the platform.
MACH features its own proprietary private permissioned blockchain that is built for scalability and performance and conducts frequent reconciliation checks against any external DLTs. The MACH chain can also store metadata required for regulatory and legal adherence
See Workflow Engine slide for more information.
The GUI provides the ability to monitor LMS, see errors and platform procedures, enforce 4-eyes checks and other admin activities such as user and participant management.
See MACH Blockchain slide for more information.
SWIFT messages are sent to participants, including MT54’s, MT56’s, MT53’s, MT900, camt.054, pain.998.
The workflow engine drives the settlement process and ensures adherence with regulatory and legal requirements.
See LMS slide for more information.
The Liquidity Management System (LMS) ensures alignment with Target2 and tracks participant thresholds.
See MACH Bridge section for more information.
Assign ensures tokens are assigned the correct information to ensure regulatory adherence and enable token management
Tokenise facilitates the tokenisation of traditional assets and can create native digital assets on private and public networks.
Notifications inform users of errors. The MACH platform includes exceptions management screens and a ‘Camunda cockpit’ to view and manage errors on the platform.
Bridge provides interoperability between DLTs to perform DLT operations
See Apache Kafka slide for more information on connectivity between system components.
Optimise facilitates settlement finality, including netting of transactions.
Ledger provides a single source of truth for traditional, tokenised and native digital assets. It provides the foundation for future-proof process handling.
Message Flows | Settlement Transaction (EU)
▪ Send and receive settlement and event messages via: ▪ SWIFT network ▪
SFTP ▪ ISO20022 standard only
▪ Settlementinstructions recorded in wallet stored on CSDParticipant account
▪ CSDchecks wallet to ensure there is sufficient securities/cash to settle the transaction
▪ Settlementand event status messages update transaction status in participant’s wallet
▪ On settlement, walletbalances updated to reflect settlement of securities and cash
T2S receive and match settlement instructions and report status to
▪ On Intended Settlement Date T2S transmits settlement status messages (confirmation / fail) to CSD
▪ All messages sent via SWIFT using ISO20022 standard
Message Flows | Asset Servicing
Example asset servicing flow for a mandatory event
Technology Architecture
Overview
MACH CSD | Architecture
MACH CSD is built on a robust three-tier architecture designed to enhance efficiency, security, and scalability.
Layer 1: Business Logic
• Workflow Engine: Manages business logic and workflows with intelligence developed to support financial services, including the securities settlement system, asset lifecycles, user permissions, unhappy paths, and approval processes.
• Liquidity Management System (LMS): Enables efficient reserve asset and risk management. Facilitates the processing of SWIFT messages, confirmations of matched buy and sell orders, validation checks, near real-time transfer of assets, and alignment with T2 using SWIFT messaging.
• Securities Settlement System: Ensures the transfer of securities and funds between parties after a trade is executed. MACH's SSS mitigates settlement, and counterparty risks and ensures timely and accurate settlement of transactions.
• Business Logic: Supports complex financial operations and integrations, including issuer registration and wallet opening for the accounting and storage of tokenised bonds, broker registration and wallet management, and the issuance and validation of bonds.
Layer 2: Identity and Authentication
• Transactions: Manages and processes transactions efficiently, ensuring all transactions are executed and recorded accurately.
• Multi-Ledger Wallet: Supports synchronisation and interoperability across multiple ledgers, including omnibus wallets for broker’s clients.
• Synchronisation: Ensures data consistency across systems.
• Interoperability: Seamlessly integrates with existing financial systems and infrastructures, supporting both traditional and digital assets.
Layer 3: Core Cryptographic Record Operations
• Cost Reductions: Lays the foundations for internal operational and technical re-engineering.
• Promote innovation and competition: Help solve current challenges presented by existing market incumbents.
• Independent and user-focused market community: Guided by market participants to shape, create and implement new products.
• Supporting Asset Classes: Deploy a technology solution that allows for traditional assets to be supported more efficiently and create the foundation for new digital / tokenised solutions 3 Tier Architecture 1. The Business Logic layer enables business logic and workflows to be implemented, with intelligence developed to support financial services workflows 2. Layer 2, Identity and Authentication, authenticates and manages interaction with the core blockchain, users and reference/static data (e.g. instrument lists)
& Administrators
Workflow Engine
• Manages business workflows, Liquidity Management System, and coordinates business processes
• View and fix
• Member credentials, permissions, accounts, and other info
• Workflow reference, state, and error data Member Data Store
Workflow Data Store
• Single bridge between application and all DLTs Workflow Administration
• Securities definitions and other ref data.
Securities & Cash Data Store
• Securities holdings cache for faster queries
Participant Wallet
• A participant wallet is a logical construct that enables each participant to view their security holdings and transaction history across DLTs.
• Each participant can use this concept to view security holdings, transaction history and eventually other information – for example, funding details.
• Locking information and address translation tables
Bridge Data Store
• KMS used for encrypting and decrypting private keys
MACH Workflow Engine
Business logic and rules
MACH CSD | Workflow Engine
MACH’s custom workflow engine provides a tool to perform complex business processing on the MACH platform
What is the Workflow Engine: The workflow engine is a processing and automation layer that enables users of MACH technology to design, test and execute complex transaction processes directly on to assets held within platform
Unique Selling Point:
✓ The workflow engine allows users with business domain knowledge to map out and execute business processes. This enables workflows to be created by those who fully understand the business process.
✓ Workflows are created, stored and executed from within the platform
✓ The workflow engine has a dependency-based execution flow meaning that steps will execute at the earliest point possible once all dependent steps have completed
✓ Workflows interact with functionality e.g. Reports / Messaging
✓ The workflow engine can execute long running workflows capable of facilitating a wide array of asset servicing processes
✓ Executed workflows can be monitored through the GUI allowing tracking of processing progress and key flow milestones
✓ DvP Model 1
✓ Asset Servicing
✓ SFD 1/2/3
✓ Issuance ✓ Redemption
Power of Attorney
✓ Used when the workflow needs permission to execute actions on behalf of an asset owner/holder
✓ Allows the workflow to operate an address, with the explicit permission of the address holder
✓ Time and activity restricted to limit possible actions
Product Overview
Liquidity Management System (LMS)
Alignment with Target2 to manage cash
MACH CSD | Liquidity Management System (LMS)
MACH has built the foundational functionality to enable efficient reserve asset and risk management. MACH’s Liquidity Management System (LMS) currently enables Settlement Bank users to manage credit risk for Custodians. To facilitate this management of credit risk, a representation of cash is held off-chain in a connected append-only database ledger. This representation of cash could be replaced with digital tokens or central bank digital currencies if required.
MACH’s liquidity management system (LMS) currently facilitates:
Kafka
Information streaming
MACH CSD | Apache Kafka
Apache Kafka enables real-time data processing, allowing businesses to make quick, data-driven decisions. Its scalability ensures that systems can grow with the business, handling increased data loads efficiently. Kafka’s reliability and durability minimise data loss, ensuring continuous operation and data integrity. Additionally, its versatility in integrating with various systems streamlines data pipelines, reducing complexity and operational costs.
How Kafka is used:
Key Benefits:
RESTful API
Provides a RESTful API over HTTPS, using JSON for lightweight messaging.
Unlike most DLT networks that use raw TCP, MACH uses Kafka for node communication, ensuring scalable and resilient event processing.
Processing Efficiency Network
Scalability
Kafka’s distributed design allows horizontal scaling, handling increasing loads efficiently.
By offloading tasks like transaction sequencing from the consensus process, Kafka improves overall system performance.
Messaging & Event
Streaming
Kafka is used to build real-time data pipelines and streaming applications. It can handle millions of events per secound.
Blockchain Integration
In the DC blockchain network, Kafka is used for transaction sequencing and routing state updates. This approach is faster than traditional consensus methods.
Energy Efficiency
Reduces redundant computation and avoids wasteful consensus methods, leading to lower energy consumption.
MACH Blockchain
Immutable single source of truth
MACH CSD | MACH Blockchain
The MACH blockchain is a Distributed Ledger Technology (DLT) platform designed to transform the efficiency, security, and compliance of financial market infrastructures. Key Features include:
1. Resilient and Reliable Node Hosting:
a. Distributed Architecture: Nodes are hosted across multiple availability zones, ensuring high availability and fault tolerance.
b. Rapid Consensus: Achieve near real-time transaction validation with a consensus process that occurs every 5 seconds.
2. Data Integrity and Security:
a. Comprehensive Transaction History: Each validation node maintains the entire transaction history and block state, ensuring data consistency.
b. Robust Security Protocols: Transactions undergo rigorous authentication, authorisation, and validation, preventing data manipulation.
3. Advanced Reporting Chain:
a. Mirroring and Reconciliation: Mirrors securities holdings and account addresses across the MACH ledger and external DLTs, ensuring high-speed settlement finality and data integrity.
b. Metadata Inclusion: Supports address metadata, crucial for external DLTs that lack this capability.
c. Periodic Reconciliation: Regular reconciliation workflows maintain alignment between the MACH ledger, external DLTs, and the high-performance securities ledger.
4. Efficient Cash Ledger Management:
a. Alignment with T2: The MACH cash ledger is synchronised with T2, the golden source for the cash leg of Delivery versus Payment (DvP) transactions.
b. Liquidity and Risk Management: Provides essential information on liquidity and cash memorandum accounts, aiding in credit risk management for settlement banks.
The MACH Blockchain is optimised for:
Scalability and Performance
✓ The high-performance cache in the securities ledger ensures efficient data retrieval, reducing the need to query slower DLTs.
✓ Periodic reconciliation ensures data consistency across all ledgers.
Regulatory Compliance
✓ The MACH ledger’s design supports comprehensive audit and regulatory compliance, essential for financial market infrastructures.
MACH Bridge
Providing flexible interoperability
MACH Bridge provides a universal messaging capability to seamlessly connect to the MACH DLT
What is MACH Bridge: MACH Bridge is a translation and messaging layer that enables your current infrastructure to connect with MACH’s technology / new digital products via a single interface
Unique Selling Points:
✓ Interoperable with other DLT technology e.g. Private/Public which allows for consolidation of ledgers on a central platform
✓ Can insulate and future proof from other financial infrastructure change
✓ Given the simplicity of the MACH Bridge interface, your internal technology can connect with MACH DLT at speed, without the need to change your existing messaging infrastructure or the need to undergo a lengthy integration period
• MACH client has the option to connect existing environments to the MACH DLT infrastructure quickly and efficiently
• Workflows can be built and deployed securely on local or Cloud based systems
• MACH Bridge comes with a library of components that makes it easy to integrate MACH DLT / blockchain environments with your existing traditional infrastructures
• This enables new connectors to custom API environments
✓ Transactions
✓ Data feeds
✓ Reporting
✓ Pricing
✓ Messaging
✓ Notifications
✓ Alerts
MACH CSD |
The MACH Bridge leverages a micro-services architecture, enhancing flexibility and supporting future scenarios such as smart-contract to smart-contract operations and Hash TimeLocked Contracts (HTLCs).
Bridge Workers
✓ Standalone micro-service applications compatible with the Bridge Orchestrator.
✓ Each worker implements an interface tailored to the linked DLT’s functionality, ensuring atomic operations and reporting success or failure as a whole.
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Bridge Orchestrator
✓ Maps incoming requests to underlying DLT operations, maintaining state for retry or rollback operations to ensure consistency.
Bridge Request Service
✓ Manages incoming requests and facilitates communication between the application layer and bridge components.
Bridge Signing
Service
✓ Decouples key management from transaction creation, allowing private signing keys to be securely held within a Key Management Service (KMS) or by other parties.
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The MACH Bridge offers enhanced flexibility and security through its micro-services architecture, supporting decentralised operations and future scenarios beyond traditional CSDs.
Key features include decoupled key management for improved security, standalone workers to avoid dependency conflicts, and comprehensive unit test coverage to ensure reliability. The Bridge Orchestrator maintains consistency and visibility in multi-step operations, while the Bridge Signing Service securely manages transaction signing. Additionally, the platform supports configurable address visibility and uses standard crypto libraries, enhancing overall operational and development efficiency.
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