A successful pilot to sell and buy mutual funds through blockchain could revolutionise the way products are distributed.
In the largest-scale blockchain test in the industry to date, technology firm Calastone, proved capable of processing transactions equivalent to a full day’s trading sourced from across its global transaction network, which spans over 1,200 fund distribution and fund manager clients across 34 markets.
Calastone chief information officer Campbell Brierley said: 'Successful initial testing, involving a large volume of trades across a fully representative global market universe, has given us a powerful understanding of how to optimise the distributed ledger technology to reduce the frictional cost of trading across the industry on a global scale.
He added: 'Placing the market on a blockchain effectively opens the door for potential efficiencies across the whole transaction life cycle in excess of those that could be achieved via the optimisation of transaction processing alone.'
The test marked the first phase of Calastone's distributed market infrastructure proof-of-concept (PoC).
If further tests prove successful it could have significant impact on the efficiency of funds sales and could lower the costs of fund products, as less people would be needed to distribute them.
'The positive results of our PoC has shown that by using distributed ledger technology across the entire lifecycle of mutual fund transactions, from order placement through to the settlement and payment, industry participants could significantly benefit from simpler processing,' Calastone deputy CEO Ken Tregidgo said.
Calastone has announced a second phase to its PoC, and is engaged with a number of design partners drawn from its global client base.
'Our vision is to enable friction-free trading for funds industry participants,' Calastone CEO Julien Hammerson said.
'The scale and connectivity we have built in major markets around the globe makes us the natural partner to explore operational and infrastructural efficiencies across the global funds industry.'