Blockchain: Blockchain-for-funds projects go live

Computer_logicNicholas Pratt looks at the launch of two blockchain-based services for fund distribution, registration and settlement, and their implications for the industry.

Like the anticipation for a London bus, you wait months for a new funds distribution network based on distributed ledger technology (DLT) and then two come along at once.

In May, Calastone went live with its blockchain-powered Distributed Market Infrastructure (DMI) after a two-year-long period of testing the clearing and settlement of funds. According to Calastone, 1,800 customers across 41 countries and territories have migrated to the network, which it says makes it the largest blockchain connecting financial organisations in the world.

Among the early adopters are RBC Investor & Treasury Services, fund managers Seven Investment Management and Tilney Investment Management, and service providers Multrees and Bravura Solutions.

Meanwhile, at the end of April, FNZ launched ChainClear, which it describes as “the first production blockchain ecosystem for the asset management industry”. It has been developed in partnership with a consortium of fund managers that includes Aberdeen Standard, Kames Capital, Legg Mason and Merian Global Investors.

“We are running daily market transactions for a number of FNZ platform customers and FNZ Transfer Agency customers with others progressively going live,” says Phil Goffin, head of innovation at FNZ.

Both ChainClear and DMI operate in a similar manner and have a similar objective. The former is using DLT to replace the thousands of copies of transactions and holdings with “a single, secure, verifiable source of truth, universally accessible by all parties”.

As Goffin says: “The global fund industry today relies on a plethora of peer-to-peer connections between investors, managers and platforms to effect basic fund activities such as trading, settlement, transfers, distributions and reconciliations.

“None of these transactions are synchronised in…

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