Calastone, which is a global fund transaction network serving more than 1,700 financial organizations across 40 global markets, will migrate its platform on blockchain in May 2019 through a distributed market infrastructure (DMI). The DMI will seek to reduce the rising costs, risks and difficulties that make funds an unattractive investment vehicle compared to other investment vehicles.
The blockchain marketplace will let buyers and sellers connect and trade, settle and service funds friction-free, while eliminating an ever-growing risk and cost for fund managers and investors experienced within the current system. Participants will enjoy a real-time view of each transaction record and all will have a single version of truth and hence eliminating a common friction points as experienced today in areas such as reconciliation and settlement. These two will be resolved automatically with all transactions being performed in the same environment.
For instance, liquidity is significantly improved by avoiding tying up of operating capital, when settlements are calculated net and values are automatically generated in real-time from the flow of orders.
The platform will also reduce the manual systems as well as outdated systems and technologies in the funds sector today, which is usually the cause of high cost of distribution that impacts investor and marketability of funds rendering platforms less competitive with other forms of investment. Thus, it will remove the opaque, fragmentation and slow nature of the industry today.
Organizations will also be able to use the platform for innovating new services and investment opportunities in order to stay competitive. For instance, they will be able to access and use data to re-innovate customer experiences and products.
According to the organization, technological mutualisation of the trading and settlement processes can reduce the overall global cost of fund distribution by as much as £3.4 billion. Calastone’s Chief Innovation Officer Campbell Brierley said the platform will totally transform trading and servicing of funds and can deliver significant long-term value.
Calastone’s Chief Operating Officer Stephen Leggett said the transitioning to the blockchain platform will be a seamless experience for customers adding that there are already working with a number of clients who recognize the capability of the Distributed Market Infrastructure (DMI).