Schroders has confirmed it is exploring the tokenization of funds with fund distribution platform Calastone. Part of the work is with the Monetary Authority of Singapore (MAS), where it is participating in Project Guardian, which explores the use of public blockchains for institutional tokenization.
In Singapore, variable capital companies (VCC) are a popular vehicle for funds. The MAS trial will use this structure for tokenization. However, the asset manager won’t purely use it for broad retail reach. Instead the technology will also be used to enable greater personalization and to automate a lot of the functionality.
Marita McGinley, Head of Digital Assets Strategy, Schroders believes tokenizations major advantages include “synchronised data and heightened automation. Moreover, it expands accessibility and enables customisation, providing investors with more options. Managed in a responsible way, we think this is good for clients and for the market.”
In terms of asset management, Calastone has been exploring and deploying blockchain for far longer than anyone in the sector. It started using DLT on its platform in 2019 for order routing, but wants to see the usage expand substantially.
“Tokenising fund units will not provide the transformation that the industry is looking for,” said Calastone’s CTO Adam Belding. He believes the industry needs to be more ambitious and look to tokenize the underlying assets and automate many processes. “Applying DLT and tokenisation at all levels of the fund from trading, to administration and distribution, provides a much more fundamental transformation.”
Last month it released a whitepaper elaborating its vision of tokenization. Schroders is just one of the asset managers that it’s working with on exploring DLT.