Technology Roundup: Blockchain-based Fund Trading System Launches

Investment technology company Calastone has launched its blockchain-based infrastructure for the trading and settlement of pooled investment funds.

More than 1,800 financial services providers in 41 countries have been added to the system, dubbed the “distributed market infrastructure” (DMI). Calastone claimed this was “the largest group of financial services organisations ever to connect and transact on a live distributed ledger”.

The company said in a statement that DMI users could “access a fully mutualised global funds marketplace” in which investment funds were traded and serviced in real time, potentially saving £3.4bn (€3.9bn) a year.

“This will play a key role in stripping out the ever-increasing costs, operational burdens and risks inherent within the current model,” Calastone said.

Campbell Brierley, Calastone’s chief innovation officer, added: “Through Calastone’s blockchain-enabled market infrastructure, all participants across the funds world can work together seamlessly and view trading activity in real time.

“Information now ripples instantly across the market, a step change from the previous fragmented model. Financial services firms worldwide can, via the DMI, utilise new services, enhanced capabilities and new investment opportunities, allowing them to evolve their proposition to one that will be more competitive and valuable long term.”

Calastone has been testing the blockchain-based technology for nearly two years. Early adopters of the DMI include back office service providers and wealth managers such as RBC Investor & Treasury Services, Bravura Solutions, Seven Investment Management, Multrees and Tilney Investment Management.

Blockchain trading platform overhauls funding structure

Separately, the capital structure of Iznes, another blockchain-based platform for fund trading, has been overhauled after its technology provider went into administration.

SETL, a fintech company that designed Iznes’ underlying technology, entered administration in March but this month re-emerged as a new corporate entity, according to reports.

In a press release this week, Iznes said SETL had sold its stake in the company to OFI Asset Management – a founding investor in the blockchain platform – along with five other French asset managers, including Arkéa Investment Services, Groupama Asset Management, La Banque Postale Asset Management, La Financière de l’Echiquier and Lyxor Asset Management.

Iznes acquired intellectual property rights connected to the technology and has hired SETL’s product management team with a view to internalising its IT function, the press release stated.

Iznes was launched in March this year and already has €1bn of assets registered on its platform. It said the revised capital structure would allow it to expand its operations in France and Luxembourg to work with more asset managers.