- Calastone's entire global fund transaction network to be migrated to blockchain in May 2019
- The first transition to blockchain for the global funds sector - making funds more accessible to all market participants and investors across 40 markets, and more than 1,700 financial organisations
- Calastone's Distributed Market Infrastructure will transform the trading of mutual funds, creating a global funds marketplace best equipped to meet the needs of future generations of investors
- The DMI has the potential to reduce the overall global cost of fund distribution by as much as US$4.2 billion* per year
Calastone, the global fund transaction network, today announces that its entire global network of more than 1,700 financial organisations, across 40 markets around the world and in Asia, will be migrated to blockchain in May 2019 via the company's new Distributed Market Infrastructure (DMI).
The migration, a world-first, connects one of the largest communities of global financial organisations using distributed ledger technology, marking a significant step for the digitalising of the funds sector.
The DMI creates a global funds marketplace, in which buyers and sellers can connect and transact. It creates an ecosystem within which the trading, settlement and servicing of funds is friction free, eliminating ever-growing risk and costs for fund managers and investors, embedded within the current system.
At the same time, organisations can leverage the open technology on which the DMI is built, allowing them to innovate, stay competitive and offer new services and investment opportunities better suited to the changing, more sophisticated needs of modern investors.
Calastone believes that the overall global cost of fund distribution could be reduced by as much as US$4.2 billion*, achieved through the technological mutualisation of the trading and settlement processes.
Campbell Brierley, Calastone's Chief Innovation Officer, comments;
"Calastone's DMI will totally transform the trading and servicing of funds and has the potential to realise significant long-term value .
"By bringing all trading relationships together, within our shared blockchain-enabled infrastructure, all participants benefit through the real-time view of each record and powerfully, from a data perspective, a single version of the truth. Instantly this alleviates common friction points that exist today, including areas such as reconciliation and settlement, which are resolved automatically with all transactions being performed in the same environment. By making friction-free trading accessible to all parties in the value chain, we are creating an environment that marks an inflection point for the future of the funds sector, optimised to meet the needs of customers and investors now and in the long-term."
The funds industry trails other financial services sectors, still beset by manual processes, outdated systems and technologies. This has led to a high cost of distribution which ultimately impacts the investor and marketability of funds, which themselves compete with other forms of investment.
This largely results from the traditional way funds are traded, which is opaque, fragmented and doesn't work in the interest of investors. This is particularly the case in Asia, which encompasses a range of distinct markets. There are significant pressures on the industry to adapt to meet investor demands for greater speed, transparency and return on capital.
The DMI addresses this directly, in creating a platform that digitalises the trading, settlement and distribution of funds by bringing together all market participants and equipping them with the tools to innovate, grow and differentiate. Clients using the DMI will be able to leverage the benefits of the technology through a range of new services and capabilities, alleviating risk, cost and improving investor experience across all parts of the value chain.
Leo Chen, Managing Director and Head of Asia, states:
"The Asian funds industry develops rapidly with a surge in sophisticated investors and is expected to accelerate its growth through various fund passporting schemes. Industry participants continue to look for options to innovate and to stay competitive. The DMI can be an enabler of new business models and revenue streams.
"Asia is an emerging leader in fintech innovation, testament to the highly supportive stance regulators have taken towards financial technology testing and development - as we have seen from the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS), who have proactively cooperated with industry to create a favourable environment for financial services infrastructure advancement. The DMI is a shining example of that innovation.
"We are already working with a number of clients who recognise the capability that the DMI can offer immediately and for the long-term. The migration from our global transaction network onto the new DMI will be a seamless experience for our customers, all of which will quickly and easily be able to leverage the advantages that distributed ledger technology affords."
Julien Hammerson, Calastone's Chief Executive Officer, comments;
"The launch of our DMI marks an exciting step for the industry in accelerating the digitisation of the funds sector and is a significant achievement for Calastone. The migration of our global network is the culmination of years of hard work and continued investment in innovation.
"Funds remain a vital investment vehicle, though remain hampered by continually rising costs and threat of competition,ultimately rendering the current system economically and operationally unsustainable. Through leveraging blockchain technology, the DMI transforms the way in which funds are traded, enabling an investment management community that can meet the changing needs of investors."
*Calastone has calculated the potential cost savings of moving to a distributed and mutualised market infrastructure using data from Deloitte's study "Europe's fund expenses at a crossroads; The benefits of mutualizing the cost of distribution" alongside data from the 2018 Investment Company Fact Book. Calastone's calculation has been applied to mutual fund assets under management for the global funds market, excluding the USA.
About Calastone
Calastone is the largest global funds transaction network, connecting many of the world's leading financial organisations. Our mission is to make funds accessible to everyone by reducing the frictional cost of trading. We use smart technology solutions and industry collaboration to lower operational risk and enhance client profitability through digitisation and automation.
Over 1,700 customers in 40 countries and territories benefit from Calastone's services, processing over 9 million messages and GBP170 billion of transactions each month.
Calastone is headquartered in London and has offices in Luxembourg, Hong Kong, Taiwan, Singapore and Sydney.
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