Capital markets News

FundsDLT processes blockchain fund transaction via Clearstream

investment funds

Yesterday funds distribution platform FundsDLT announced that it processed a fund purchase transaction which was initiated by an investor via a mobile app and settled via Clearstream, the Deutsche Börse post-trade arm. FundsDLT aims to help fund distributors to digitize their operations and connect with asset managers and investors. The cost of distributing funds are notoriously high.

Clearstream is an investor in FundsDLT alongside the Luxembourg Stock Exchange, Credit Suisse Asset Management and Natixis Investment Managers. The FundsDLT platform was developed by Fundsquare, a Luxembourg Stock Exchange subsidiary, together with IT company InTech and KPMG as an advisor. It uses an enterprise blockchain version of Ethereum.

In this transaction, the Zürcher Kantonalbank (ZKB) customer used a mobile phone app to place the order, which went via FundsDLT’s private blockchain and was settled by Clearstream’s fund settlement solution Vestima, with which ZKB is already integrated.

Typically a transaction would take hours, but in this case, it took just minutes. The cross border transaction between Luxembourg and Switzerland was faster and more efficient, with both ZKB and the customer monitoring the trade in real-time. 

“With FundsDLT we convinced ourselves of the potential for the entire value chain in the fund business, including the improvement of customer experience, efficiency in the settlement process and the reduction of costs,” said Peter Hubli, Head Digital Asset Solutions at ZKB. “By leveraging blockchain technology, we get both an overview of the entire flow of assets and money and can also identify and understand investor’s needs.”

Another firm that leverages blockchain in the fund sector is IZNES and its French fund administration platform. Just yesterday, we reported that IZNES was involved in a central bank digital currency transaction.

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