Wall Street's largest back-office processing service is partnering with IBM to upgrade how payments and record keeping for credit default swaps are handled by putting the system on a blockchain by early next year.

Depository Trust & Clearing Corp., the New York-based utility that settles and clears all stock and bond trades in the U.S., is seeking to reduce redundancies and cut costs in the system that manages $11.7 trillion in outstanding credit swaps, the company said in a statement Monday. IBM, as well as blockchain startups R3 and Axoni, will help DTCC create the single network of credit swaps users.

The shift is similar to a plan by Digital Asset Holdings to move all clearing and settlement of stocks on the Australian Stock Exchange to a blockchain, which is also referred to as a distributed ledger. Wall Street has been seeking ways to use distributed ledgers for the past several years as a way to cut costs by speeding up securities and derivatives settlement times. Just over a decade ago in the credit swap market, for example, backlogs of up to 17 days' worth of trading built up before the market became electronic.