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UK-based global fund transaction network Calastone has announced that it will switch its entire global network, comprising of over 1,700 financial organisations across 40 global markets, to a blockchain-based system in May 2019.
The migration, which the firm claims to be the world’s first, will be done via Calastone’s new Distributed Market Infrastructure (DMI). It will mark a significant step towards the digitalization of the funds sector.
The traditional way in which funds are traded are largely manual processes and are opaque and fragmented. This, in turn, leads to a high cost of distribution which ultimately impacts the investor and marketability of funds.
The DMI addresses these challenges by creating a platform that digitalizes the trading, settlement and distribution of funds by bringing together all market participants. It creates a global funds marketplace where buyers and sellers can connect and transact. This ecosystem will allow friction free trading, settlement, and servicing of funds, while reducing the risks and costs for fund managers and investors.
Calastone estimates that the technological mutualisation of the trading and settlement processes could help reduce overall global cost of fund distribution by as much as £3.4 billion.
Campbell Brierley, Calastone’s Chief Innovation Officer, said that the DMI will totally transform the trading and servicing of funds. The blockchain-enabled infrastructure will allow participants to have a real-time view of each record and a single version of truth.
“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,” he said. “By making friction-free trading accessible to all parties in the value chain, we are creating an environment that marks an inflection point for the future of the funds sector, optimised to meet the needs of customers and investors now and in the long-term.”
In addition, by leveraging the open technology on which the DMI is built, organizations would be able to innovate, stay competitive and offer new services and investment opportunities better suited to the evolving needs of modern investors.
“Migrating our global transaction network onto the new DMI will be a seamless experience for our customers, all of which will quickly and easily be able to leverage the advantages that distributed ledger technology affords. We are already working with a number of clients who recognise the capability that the DMI can offer immediately and for the long-term,” Stephen Leggett, Calastone’s Chief Operating Officer, said.
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