Calastone’s network connects more than 1,300 financial service organisations across 34 global markets processing over £80bn of trades and 7 million messages each month, making it the largest global fund transaction network. Calastone has transformed the funds sector, enabling frictionless trading by making it possible for all trading entities and counterparties to connect, interact, process and settle transactions digitally.
In June, Calastone successfully completed the first phase of its blockchain-enabled distributed market infrastructure (DMI) proof-of-concept (PoC), which saw Calastone test and verify the feasibility of using the technology to create a global marketplace for the trading and settlement of mutual funds. Today the company announces that 2019 will see the technology underpinning the core of its network moving to a private and permissioned based blockchain infrastructure.
The mutual funds market remains a sector challenged by operational inefficiencies, cost and risk, often resulting in an inability to meet fast evolving customer demands. The current requirement to replicate and reconcile records across the value chain creates an overhead which dwarfs the benefits already offered by Calastone’s trading and settlement solutions. The move to blockchain enables the firm’s global customer base to plan for and deliver major improvements in a controlled, measured way.
This migration enables Calastone to achieve the highest levels of operational resilience and scale through the distributed, yet private nature of the new blockchain infrastructure. The PoC has proven the performance capabilities that enable the processing of transaction volumes and fund flows to be many times greater than are expected today, demonstrating scalability of the new infrastructure.
Julien Hammerson, CEO Calastone adds;
“As we build the business we consistently put innovation and customers first. Our vision remains to work with the industry to reduce the overall total cost of ownership by making it friction-free and increasing value for all market participants. Our services have introduced significant operational and cost efficiencies into the sector and as we scale our business for the future, 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.”
As an industry sector under increasing cost, operational and regulatory pressures – with the advent of GDPR and the imminent introduction of MiFID II – Calastone recognises that blockchain can provide much needed relief for the funds market in reducing the cost of friction-free trading and the total cost of ownership, whilst delivering the speed of service and regulatory transparency, which will soon be a basic pre-requisite worldwide.
Ken Tregidgo, Deputy CEO, Calastone comments on the scale of opportunity blockchain affords the funds sector;
“The funds industry is subject to increasing cost pressures, whilst investors continue to demand increasing returns and regulatory transparency. 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.
Whilst the potential for long term change is great, the migration path for customers to take advantage of the future infrastructure will remain seamless, enabling clients to move when they are ready. A blockchain-enabled marketplace means alleviating operational inefficiencies, increasing performance and generating greater savings – a win-win for everybody.
We’re conscious that developing a better infrastructure, ready to meet the future needs of the industry is a long process, though we’re thrilled to see the first stages of this come into effect and are excited about the opportunities it will bring.”
For more information on Calastone’s blockchain-enabled DMI, please go to: https://www.calastone.com/insights/a-brave-new-world-funds-europe-interview-with-ken-tregidgo/