U.K.-based mutual funds Calastone is set to migrate its entire system to a blockchain-based network in May 2019 through its new Distributed Market Infrastructure (DMI). It will perhaps be the world’s first blockchain-powered global funds marketplace.
Calastone’s global fund transaction network comprises a network of more than 1,700 financial organizations, across 40 global markets. The network of global financial organizations will be connected using distributed ledger technology (DLT).
The blockchain-powered DMI is expected to facilitate the trading, settlement and servicing of funds, as well as mitigate risk and costs for fund managers and investors.
The shared blockchain-enabled infrastructure allows participants to benefit through the real-time view of each record . This alleviates the need for manual reconciliation and settlement, which are resolved automatically.
Calastone believes that the use of DLT in the funds sector could potentially save overall global cost of fund distribution by as much as 3.4 billion British pounds or $4.3 billion. This is expected to be achieved through the technological mutualization of the trading and settlement processes and costs.
Unlike the financial services sector, the funds industry is plagued by manual processes, outdated systems and technologies, which lead to high cost of distribution and impacts the investor and marketability of funds. These are inefficient and expose firms to risk through duplication and inaccuracy.
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