The global mutual funds industry could save €2.15 billion a year if it moved from the current manual process of fund trading and adopted an online ledger technology known as blockchain, according to a study published today.
The study, by technology firm Calastone, uses data from a study by Deloitte on the financial savings that could be made by mutualising the cost of distribution.
The estimated savings were calculated on the basis of daily trade volumes of funds in the UK, Ireland, Luxembourg, Hong Kong, Singapore, Taiwan and Australia.
London-based Calastone, which claims to operate the world’s largest funds transaction network, has already introduced automation to its own network which it estimates has generated savings of £458 million over the last six years.
Last June the firm tested the feasibility of using blockchain to develop a common global marketplace for the trading and settlement of mutual funds by sourcing trades, equivalent to a full day’s trading, from across the firm’s global network – which spans over 1,200 fund distributors and fund managers in 34 markets.
In December the company announced its own core network technology will migrate onto blockchain technology in 2019.
Calastone chief executive Julien Hammerson said: “Whilst what we have achieved to date has enabled savings for the sector, our own analysis highlights how these benefits can be accelerated when using blockchain technology to automate the entire lifecycle of mutual fund transactions, from order placement through to the settlement and payment.”
Last year a group of market participants including Natixis announced that investors had made the “first real” share purchases in funds using blockchain technology.
Last month BNP Paribas Asset Management said it had successfully used the technology to carry out a full end-to-end fund transaction test.
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