Natixis Asset Management says investors have successfully purchased shares in its funds using blockchain.
The purchases were enabled by a blockchain-powered fund distribution platform called FundsDLT, which is a collaboration between Fundsquare, InTech and KPMG Luxembourg.
A spokesman for the project said the platform is a new distribution channel that will significantly reduce administration costs and shorten processing times for fund transactions.
It will streamline a range of fund administration and order-routing tasks by using blockchain to automate several processes in a secure manner, the spokesman said.
The model is applicable to a wide range of funds and does not depend on the jurisdiction.
“The successful execution means that, for the first time in the fund industry, investors are using a blockchain-based platform to purchase real funds’ shares with real cash,” a statement said.
How orders for Natixis AM’s funds were placed was, first, investors used the FundsDLT mobile app to submit the standard subscription order for shares. The order was transmitted to the FundsDLT platform and the information was “immediately and simultaneously” transmitted using blockchain technology to Natixis AM and the other parties involved in the transaction, each one having its own node on the FundsDLT blockchain.
Caceis, acting in this case as the transfer agent, would be the first to react to fund orders by confirming transactions and logging them as “approved” or “declined”. Approval triggers the clearing and settlement processes which take place on the Funds DLT platform.
This change in the distribution chain marks a “real revolution for distribution activities”, the statement said.
The cash and payment process was handled using S-money, a part of Groupe BPCE. Investors topped up their S-money account with sufficient funds to cover the transaction before completing the order.
S-money was described as “a major contributor to this success, as they allowed for the movement of money via state-of-the-art technology”.
The statement added: “This real transaction has paved the way for a new financial services model.”
Said Fihri, of KPMG Luxembourg, said: “It is really exciting to be part of such a tremendous step forward. We not only replicated trades in the blockchain; we moved real cash and invested in a real fund. We are close to having an industrial product that could be used in different configurations: distributors, IFA, robo advisors and D2C.”
Olivier Portenseigne, of Fundsquare, said: “We are proud to have run the first real blockchain transactions in the history of investment funds. It was important for us to demonstrate that FundsDLT works in order to create the necessary trust that blockchain will answer the current needs of the asset management industry in terms of operational efficiency and digitalisation.”
Matthieu Duncan, CEO of Natixis AM, said: “We believe the potential for blockchain technology to enhance distribution mechanisms in the asset management industry is very significant.”
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