Clearstream has teamed up with two asset management firms and the Luxembourg Stock Exchange to launch FundsDLT, a decentralised technology platform for the distribution of funds.
Through a joint Series A investment alongside Credit Suisse Asset Management and Natixis Asset Management, the move will help strengthen the FundsDLT platform and accelerate its commercial development.
FundsDLT, which was developed from the Luxembourg Stock Exchange’s incubator and its affiliate Fundsquare, enables the reengineering of the fund distribution value chain allowing asset managers, distributors, and asset servicers to reduce costs by removing redundant activities.
“FundsDLT is an international initiative that streamlines a number of activities along the fund distribution value chain and has the potential to reduce costs for the benefit of investors across fund and investor domiciles,” said Philippe Seyll, CEO, Clearstream Banking.
Seyll added the investment is a crucial step in Clearstream’s digital strategy and will compliment its flagship fund distribution platform, Vestima.
Providers and asset managers have tested the FundsDLT platform for the end-to-end processing of funds on a blockchain platform, including BNP Paribas Securities Services and Credit Suisse Fund Services.
Industry experts believe distributed ledger technology (DLT) has the potential to significantly rationalise the highly intermediated and fragmented world of fund distribution, potentially eliminating the need for transfer agents, fund registries and fund administrators.
“The digital transformation poses some of the greatest challenges and opportunities for the investment management industry today, and blockchain can play an important role. We believe it is critical for the investment management industry to increase transparency and improve operations rapidly,” added Joseph Pinto, chief global operating officer, Natixis Investment Managers. “FundsDLT will help us achieve these objectives and will, in turn, allow us to provide an enhanced experience for investors by leveraging blockchain technology.”
The launch of FundsDLT is the latest blockchain-based project to rollout for the funds industry. In May last year, Calastone went live with its blockchain-powered Distributed Market Infrastructure (DMI) after a two-year period of testing the clearing and settlement of funds. Among the early adopters were RBC Investor & Treasury Services (RBC I&TS), Seven Investment Management, Tilney Investment Management, Multrees and Bravura Solutions.
Societe Generale Securities Services and OFI Asset Management also executed the first blockchain fund transaction on the Paris market in 2018 through the IZNES platform.