Major European financial institutions are jointly launching a platform for the investment fund industry based on a blockchain technology.
The system was initially incubated by the Luxembourg Stock Exchange and its affiliate Fundsquare who announced a Series A investment round for “FundsDLT” alongside Clearstream, Credit Suisse Asset Management and Natixis Investment Managers.
Cost Reduction Through FundsDLT
According to an announcement, the FundsDLT platform is based on blockchain from Ethereum (ETH) and allows asset managers, distributors, asset servicers and the supply chain to cut costs. The cost reduction is achieved by eliminating redundant activities while ensuring transparency and allowing for the distribution of digital funds. A representative of Credit Suisse Asset Management has said:
“FundsDLT is a platform for the investment fund industry using distributed ledger technology (DLT), with the aim to streamline fund distribution. The company will use DLT and smart contracts to provide register and account management, transaction processing as well as cash settlement / reporting.”
The spokesperson for Credit Suisse also explained that while the system is Ethereum-based, it makes use of the Quorum system as a private blockchain to ensure privacy and performance. The representative also pointed out that the project does not provide any exposure to crypto-assets and is simply using DLT to offer services already provided with increased efficiency by existing intermediaries.
Chief Global Operating Officer of Natixis Investment Managers Joseph Pinto stressed the importance of blockchain to industry:
“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.”
Given its potential for enhancing system transparency and accessibility, blockchain is seeing increasing adoption in the finance sector. More than 20 Chinese banks have used blockchain to process foreign trade transactions worth more than $56 million.
Blockchain is seeing increasing adoption in the finance industry due to its potential to enhance the transparency and accessibility of systems, with over 20 banks in China used blockchain to process over $56 million in foreign trade transactions.
In addition, major banks including HSBC, BNP Paribas and Citi will soon launch a trade finance blockchain platform in Singapore.