A group of firms, including the asset servicer RBC Investor & Treasury Services and fund manager Seven Investment Management, are among what is described as “the world’s largest financial services community” to start operating on a blockchain-powered fund distribution system.
The two firms were among early adopters of a blockchain-enabled ‘distributed market infrastructure’ (DMI) created by fund network, Calastone, and which went live on Monday.
Calastone said 1,800 customers across 41 countries and territories had migrated to the system and now connect and transact on a live distributed ledger that Calastone began testing for the trading and settlement of funds around two years ago.
The benefits will be reduced costs, better risk controls and more operational efficiencies, Calastone said, adding the system represented a “major step in enabling digitalisation and friction-free trading [in the funds industry] at a significant global scale.”
Calastone has forecast there could be more than £3.4 billion in savings per year for the global (excluding US) mutual funds market, achieved through the “technological mutualisation of the distribution model”.
Real-time trading, settlement and servicing of funds on the DMI will help strip out costs for the industry and Campbell Brierley, Calastone’s chief innovation officer, said industry fragmentation would be reduced.
“Information now ripples instantly across the market, a step change from the previous, fragmented model,” he said. “Financial services firms worldwide can, via the DMI, utilise new services, enhanced capabilities and new investment opportunities, allowing them to evolve their proposition to one that will be more competitive and valuable long-term.”
New services include a ‘sub-register’ that creates a shared, real-time view and history of the registers between trading partners at any point in the distribution chain.
Julien Hammerson, Calastone’s chief executive officer, said: “The launch of the DMI today (Monday, 20th) marks an important step for the entire funds industry, creating a friction-free global market place for funds.”
Bravura Solutions, Multrees and Tilney Investment Management were also among the early adopters.
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