Capital markets News

UBS distributes first fund issued on iCapital’s DLT infrastructure

icapital dlt funds

iCapital, the marketplace for alternative investment funds, has launched its distributed ledger technology (DLT) solution. The first fund issued using the technology is being distributed by UBS Wealth Management and administered by Gen II, although it did not disclose the asset manager.

When iCapital first unveiled its DLT plans in 2022, the consortium included a high profile list of participants such as Apollo, BlackRock, Blackstone, BNY Mellon, Carlyle, KKR, Morgan Stanley, State Street, UBS, and WestCap.

Rather than emphasizing tokenization, this is more about optimizing workflow. The enterprise blockchain solution provides a golden record of transactions, a feature that iCapital estimates will eliminate over 100,000 activity reconciliations over the lifecycle of a typical private fund. Hence, this will lead to cost savings and a decrease in the risks associated with manual errors.

“iCapital’s DLT eliminates the need for each party to manage multiple integrations across partner firms, reconcile data and documents to their records, and maintain conflicting workflows across funds,” said Jason Broder, Chief Product Officer at iCapital.

Typically those reconciliations take place between asset managers, fund administrators, transfer agents, distributors and custodians. The DLT can process all fund lifecycle events, including subscriptions, capital calls, distributions, reporting and liquidity.

Meanwhile, beyond crypto ETFs, the asset management sector is increasingly embracing blockchain and tokenization. Blackrock made a big splash by targeting the institutional crypto sector by tokenizing a money market fund, BUIDL. Even the DTCC is using the technology for NAV data. JP Morgan and Apollo are exploring using blockchain for personalizing portfolios. Another company that’s been working on personalization is Carlyle-owned Calastone, the fund distribution platform working with Schroders. Calastone was the first in the sector to deploy the technology back in 2019.