Northern Trust in collaboration with IBM has launched a commercial deployment of blockchain technology for the private equity market.
The firms said in a statement that, while private equity returns can be attractive, there has been little innovation in the infrastructure supporting the asset class.
Northern Trust and IBM has built what it describes as a “security rich” blockchain or distributed ledger solution based on an existing platform developed by the Linux Foundation called the Hyperledger Fabric.
It is being used for managing the administration of a private equity fund managed by Geneva-based Unigestion, a firm with $20 billion (€19 billion) in assets under management.
The firms said that the blockchain network has been designed to support compliance with current, local regulations and both the Swiss government and regulator were kept informed during the development process.
“Current legal and administrative processes that support private equity are time consuming and expensive,” said Peter Cherecwich, president of corporate & institutional services at Northern Trust.
He added that a lack of transparency and efficient market practices leads to lengthy, duplicative and fragmented investment and administration processes.
The use of blockchain is aimed at increasing efficiency, security and transparency in private equity fund administration.
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