For the first time in the fund industry, investors have successfully purchased real funds’ shares with real cash, through a blockchain-powered platform for fund managers.
Called FundsDLT the platform was developed as a collaboration between KPMG in Luxembourg, Fundsquare (a subsidiary of the Luxembourg Stock Exchange) and InTech (a subsidiary of POST Group).
The FundsDLT platform enables asset managers to sell funds directly to investors, thereby dramatically reducing the cost of administration and the time needed to process transactions, KPMG said in a media release.
Transactions in Seconds
Orders are submitted directly to the FundsDLT smart contract platform and the information is immediately and simultaneously transmitted, using blockchain technology, to all of the parties involved in the transaction.
In addition to reducing administration time, the platform streamlines compliance procedures so that customers will no longer have to be verified by each party involved. This means that the time between an investor making a decision and a transfer agent executing it can be reduced to just hours – and in the not-too-distant future, seconds.
Reshape The Industry
«It is a major breakthrough in validating blockchain as a technology to enable funds trading and has the potential to reshape the investment industry, bringing important commercial benefits to industry participants,» said Eamonn Maguire, global leader for KPMG’s Digital Ledger Services.
The first FundsDLT share purchases were of funds of Natixis Asset Management, a leading affiliate of Natixis Global Asset Management, which had announced its intention to be the first asset management firm to use the FundsDLT platform, taking advantage of blockchain technology to enhance distribution across several of its business lines.
Asia Pacific Next
This project paves the way for asset managers in markets outside of the EU, including North America and Asia Pacific, who may potentially benefit from the FundsDLT approach as they explore their options with blockchain technology.
Are Exchanges Prepared
On the implications to stock exchanges, Chia Tek Yew, Head of Financial Services Advisory, KPMG in Singapore, thinks it is no longer a question of if fund transactions can be completely executed on the blockchain, but a reality that bourses need to grapple with.
«The role of the Exchange as a clearing and settlement player, as well as a custodian for funds bought and sold in their market, will change. Plans around evolving its business model in light of this development should be made, if not already underway,» said Chia.
