A leading fund services provider is to switch its international fund trading platform to blockchain technology from May, in a move it claims will cut distribution costs by up to £3.4bn (€3.8bn) a year.
Calastone said it would be the first transition to blockchain for the global funds sector and would make products more accessible to all market participants and investors across 40 markets and more than 1,700 financial organisations.
Calastone’s clients – all of which will be switched onto the blockchain platform – include Danish pension fund AP Pension and asset managers Hermes Investment Management, JP Morgan Asset Management, Aviva Investors and Baring Asset Management, according to its website.
The whole network will start to use blockchain technology in May 2019 through Calastone’s new Distributed Market Infrastructure (DMI), a trading platform.
Campbell Brierley, Calastone’s chief innovation officer, said: “Calastone’s DMI will totally transform the trading and servicing of funds and has the potential to realise significant long-term value.”
He said that, by gathering all trading relationships together in a digital infrastructure, all participants would benefit from the real-time view of each record.
From a data perspective, this would give them “a single version of the truth”, he said.
“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,” Brierley said.
In a statement announcing the development, Calastone argued that the investment fund industry “trails other financial services sectors, still beset by manual processes, outdated systems and technologies”.
The current system of fund trading was “opaque, fragmented, and doesn’t work in the interests of consumers”, Calastone said.