Distributed Market Infrastructure

Providing a secure, accurate and fully digitised transaction lifecycle through distributed ledger technology

Distributed Market Infrastructure

The Distributed Market Infrastructure (DMI) is a blockchain-enabled market infrastructure that fully digitalises global order routing, settlement and registry updates for mutual funds.

The industry is increasingly under pressure to reduce costs and generate smoother and more efficient operations. Today, transactions are processed slowly, through a linear value chain of participants, bringing the associated costs and inefficiency of each market participant undertaking their own methods to check, balance and record each transaction.

The DMI uses distributed ledger technology to address the frictional challenges and process duplication that result from today’s trading model. Calastone looked to DLT to solve these issues as it places the entire network onto a single, secure and accurate infrastructure. Through Calastone’s DMI, all market participants benefit through the real-time view of each trade, and agree on the data and the outcome, ensuring there is a single, accurate version of all trades and balances on the chain.

By placing each element of the transaction from the order, transfer and settlement onto a blockchain, there is less opportunity for errors or reconciliation issues at individual register levels.

Clients can leverage the benefits of the DMI through a range of services:

  • DMI Order Routing enables shared, real-time views of transactions between trading partners
  • DMI Settlements provides simplified and accelerated settlements and reconciliations
  • DMI Sub-Register creates a shared, real-time view and history of the trading between partners across the distribution chain

These result in reduced risk, a lower total cost of ownership for funds, reduced cash flow exposure and a better value proposition for participants across the whole value chain.

Key capabilities of the DMI

  • Cost savings:
    • Reduced reconciliations
    • Lower settlement and infrastructure costs
    • Reduced manual processing
    • Register updates
  • Improved client service: opportunity to implement
    • Faster trading and settlement cycles
    • New products and services for investors
  • Improved controls:
    • Single version of the truth
    • Immutable audit trail across whole transaction chain
    • Real time visibility
    • Automated order handling
  • Liquidity management:
    • Know your real cash position for settlements at any time
    • Accurately estimate your expected cash position in real time at any time

We have predicted that through the use of a mutualised infrastructure, made possible by Calastone’s DMI, the global funds industry will see a reduction in cost of over £3.4 billion per year.

Through generating greater efficiency, timeliness and transparency, market participants are more able to provide a seamless investor experience.