Payments

World’s largest fund transaction network, Calastone, announces blockchain migration

Calastone - global blockchain network
(C) iStock.com/cienpies

Global funds transaction network Calastone has announced that its core transaction network will be moved onto a full blockchain-enabled infrastructure.

With a network encompassing over 1,300 financial service organisations across 34 global markets, processing over £80 billion worth of trades and 7 million messages each month, the company is the worlds largest fund transaction network.

The company has made a name for itself through its quest to make transactions between all trading parties and counterparties as frictionless as possible through making them digital. The company announced the completion of its distributed market infrastructure (DMI) PoC in June 2017.

The PoC saw the company test and verify the feasibility of using distributed ledger technology to underpin a global marketplace for trading and settling mutual funds. The company plans to move its core network over to blockchain in 2019.

“Our services have introduced significant operational and cost efficiencies into the sector and as we scale our business for the future,” said Calastone CEO Julien Hammerson. “We are ensuring we have the connectivity and technology to continue to service the increasingly sophisticated demands for efficiency, value and speed.

“In making this first step using blockchain, we are providing our customers with the requisite tools they need, to be future-ready. We are delivering a solution that will not disrupt the current connectivity and interaction our customers have with our network, rather putting them in pole position to make the step change to the blockchain when timely and additive to their specific objectives and requirements.”

Market challenges

The mutual funds market has long suffered from number of operational inefficiencies that Calastone hopes its solution will rectify. The system’s current requirement to replicate and reconcile records across the whole value chain creates huge overheads.

The PoC seemed to indicate that the switch to a distributed ledger could “greatly” increase the flow of transaction volumes and funds.

Other factors looming on the horizon are the introduction of GDPR and MiFID II, both of which are impelling Calastone to try and reduce the cost of friction-free trading while maintaining service of speed and regulatory transparency.

“The funds industry is subject to increasing cost pressures, whilst investors continue to demand increasing returns and regulatory transparency,” said deputy CEO Ken Tregidgo.

“The initial shift we’re making towards blockchain marks the first major step to addressing these issues offering significant potential for the entire industry. Our network already connects all market participants, from fund managers to transfer agents and distributors, and introducing this new technology offers significant potential for the future, for a friction-free and a more streamlined process for all counterparties worldwide.”

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