London-based investment funds transaction network Calastone has disclosed plans of switching its entire settlements network onto a blockchain by May of next year, Reuters UK reported December 3.
The plan, according to the report, is being executed in an effort to cut its current fund distribution costs to £3.4 billion or $4.3 billion, not including the U.S. market. As it stands, Calastone currently provides services across more than 1,700 companies, including JP Morgan Asset Management.
To date, Calastone still manually facilitates funds settlement between buyers, sellers, and distributors, including more than 9 million monthly transactions worth approximately $217 million, according to its websites. In an effort to streamline and automate this process, the firm is looking into integrating blockchain technology into its system, thereby eliminating the need for parties to submit the same information multiple times and as a result, improving transaction efficiency while minimizing cost.
This would not be the first time the firm has explored the nascent technology’s potential in streamlining its services. In June 2017, Calastone has announced the completion of the initial trial of a proof-of-concept for “distributed market infrastructure,” and disclosed plans of shifting its system to permissioned blockchain network by next year.
As Calastone’s deputy CEO Ken Tregidgo stated at the time:
“A blockchain-enabled marketplace means alleviating operational inefficiencies, increasing performance and generating greater savings – a win-win for everybody.”
Earlier in February, Calastone forecasted that based on data from a 2016 Deloitte study, shifting to a blockchain-based network could potentially save the global mutual funds market over $2.5 billion.
Aside from Calastone, a number of other firms have also explored blockchain technology’s application to the asset management industry. In 2016, five of Britain’s mutual fund operators have teamed up to develop a blockchain-based trading system in an effort to reduce costs.
In December 2017, U.S. mutual funds manager Vanguard has also disclosed plans of integrating smart contracts in its business operations. In September 2017, Swedish banking company SEB Group and Nasdaq have also trialed a blockchain-based system for mutual fund trading.