Calastone provides middle and back-office services to firms, aiding them in selling funds and capital through financial advisors and banks. Currently, the monthly load of the system is estimated at processing more than 9 million messages (worth around $220 billion). The move will be made possible via Calastone’s new Distributed Market infrastructure (DMI).
Such moves, as the planned for May 2019 switch, could reduce costs significantly– estimates put the numbers at billions of dollars per year. This is a significant operational change, marking one of the first considerable shifts for a mainstream financial service provider to the blockchain. It is the first of its kind for the global funds sector – making funds more accessible to all market participants and investors across 40 markets, and more than 1,700 financial organizations.
Nowadays, even though the information is sent digitally, some institutions still use faxes due to security precautions. This makes the process slower and cumbersome – an issue that is easily resolved with blockchain technology adoption.
Calastone’s Chief Operating Officer, Stephen Leggett, commented that the company is committed to innovation, which is the driving force behind their investment in new technology. He said: “Migrating our global transaction network onto the new DMI will be a seamless experience for our customers, all of which will quickly and easily be able to leverage the advantages that distributed ledger technology affords. We are already working with a number of clients who recognize the capability that the DMI can offer immediately and for the long-term.”
Julien Hammerson, the company’s Chief Executive Officer, stated: “The launch of our DMI marks an exciting step for the industry in accelerating the digitization of the funds sector and is a significant achievement for Calastone. The migration of our global network is the culmination of years of hard work and continued investment in innovation.
The implementation will lower the transaction fees considerably, up to US$4.2 billion* per year which in turn will alleviate the pressure exercised on the fund industry by investors. Moreover, automation of the processes guarantees more safety and transparency in the long run. The migration to a distributed ledger technology will allow the connection of Calastone’s large community, providing all parties with secure and fast transactions.
The company’s Chief Innovation Officer – Campbell Brierley said that “Calastone’s DMI will totally transform the trading and servicing of funds and has the potential to realize significant long-term value.”
Steps like this can prove to be crucial for the competitiveness of the funds industry, which is still mostly manually-operated, thus being prone to mistakes and more risks. The new environment, created by the DMI, will allow for a friction-less and risk-free way for users to connect and transact, while at the same time the open technology can be further developed and customized to ensure easy adoption which wants to stay innovative.