Calastone, a fund infrastructure, says it will achieve an industry first when it implements blockchain across its entire global fund network from May 2019.
The firm said this would be the first blockchain transition for the global funds sector and that it will span 40 markets and over 1,700 financial organisations.
From May next year, Calastone will begin operating a ‘distributed market infrastructure’ (DMI) that could reduce the overall cost of global fund distribution by £3.4 billion per year, the London-based firm said.
Trading of funds is “opaque, fragmented and doesn’t work in the interest of investors”, the firm said, but the DMI will create a “friction-free” system for trading, settlement and servicing in the global funds marketplace.
This will eliminate “ever-growing risk and costs for fund managers and investors, embedded within the current system”.
At the same time, funds organisations will be able to use the open technology on which the DMI is built to innovate and offer new services and investment opportunities.
Campbell Brierley, Calastone’s chief innovation officer, said by bringing all trading relationships together in the DMI, all participants would get a real-time view of each record and a “single version of the truth”.
“Instantly this alleviates common friction points that exist today, including areas such as reconciliation and settlement, which are resolved automatically with all transactions being performed in the same environment,” said Brierley.
He said the frictionless trading that would be accessible to all parties in the funds value chain and would mark an “inflection point” for the future of the funds sector.
The firm first announced its plan to migrate to blockchain in December 2017.
Alex El-Nemer, director at blockchain firm Nexus UK, said financial services could “all but eliminate” excessive amounts of paperwork and inefficient systems, and could remove the need for regular checks and updates that slow down investment processes.
“We expect many other organisations to follow-suit and switch over the next few months as the use of blockchain technology becomes the normal standard in the financial services industry.”
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