Transforming Mutual Funds Trading
Calastone which provides back and middle-office services for over 1,700 companies in the financial sector, has clients like JP Morgan Asset Management, Invesco, and Schroders. The London-based firm processes mutual fund trades for these companies and helps them in sales in the international sphere.
Calastone manages over nine million messages every month between counterparties which is worth over $217 billion and has expressed an interest to shift onto a distributed ledger. This change will facilitate the transformation of the way mutual funds are traded, especially as it will simplify unnecessary processes and cut costs.
According to a Financial times report, many companies from transfer agents to asset managers, often need to input the same information many times, creating a cumbersome, costly process and time consuming processed which are frequently prone to error. Blockchain technology, will however, be successful in eliminating most of these processes.
As per the company’s estimation, switching over to blockchain technology could reduce $4.3 billion in costs every year from fund distribution costs though the firm said that it was too early to debate on whether the innovation would fundamentally change the process of these transactions. Andrew Tomlinson, the chief marketing officer at Calastone said,
“The more you can automate, the more you de-risk, the more you streamline, the more you speed up.”
They mentioned that the technology which they had used to purchase and sell mutual funds under testing conditions in 2017 was satisfactory. They assured that they will use many data centers and clouds to protect the system and to ensure security.
Despite this, Matthias Heubner from Oliver Wyman’s consulting firm in Frankfurt has expressed concerns that banks and asset managers werr concerned about blockchain’s security measures.
Tomlinson, however also mentioned that Calastone would not be using blockchain technology unless they were completely sure of its safety and security.