Typically investment funds involve up to three parties: the retail investor, the distributor and the asset manager. Today FundsDLT announced that Banco Best, the Portuguese investment distributor, and Credit Suisse Asset Management processed live end-to-end fund transactions on its blockchain-based platform.
As with all blockchain applications, one of the benefits is transparency so that the distributor, the asset manager and the client have the same view of transactions. The other claimed benefits are improved efficiency, scalability and faster processing.
The FundsDLT platform is a Fundsquare product. The Luxembourg Stock Exchange subsidiary provides fund order routing and information services. Other participants in developing the platform are Luxembourg IT company InTech and KPMG as an advisor.
“FundsDLT is an international initiative that streamlines a number of activities within the fund distribution value chain, and as a consequence, will reduce costs for the benefits of investors across fund and investor domiciles,” said Olivier Portenseigne of Fundsquare.
For this project, Banco Best developed a consumer-facing app and the API integration with the FundsDLT platform to asses the impact on the client experience. The effect was a marked reduction in the delay between request and settlement of an order.
Claude Metz, Head of Shareholder Services, Credit Suisse Fund Services (Luxembourg) SA, said: “Integration with FundsDLT was very efficient and straight-forward. Blockchain technology in connection with potential mutualized KYC (know your client) servicing will be a game changer for the investment funds business. This initiative benefits investors, distributors and transfer agents greatly from an operational efficiency standpoint, and we are only at the beginning of this most promising journey.”
Another major player in blockchain and fund management is Calastone which plans to migrate to a blockchain-based platform in May 2019. The company process £170 billion of transactions per month.
New York startup Symbiont is working with giant fund manager Vanguard to use blockchain for distributing trade index data for tracker funds. London-based SETL has a blockchain record-keeping system for funds called IZNES. Its public announcements indicate some traction in France.
In September 2017 last year Swedish bank SEB teamed up with Nasdaq to test a fund trading platform.