In Blockchain world everybody wants to be `the World`s first`. The term started being a must in white papers, now it is all over social media, with announcements about
The World`s first tokenized equity
The World`s first STO
The World`s first regulated Crypto bank
The World`s first Initial Wallet Offering
The World`s first Regulated ATS for STOs
Today I am sharing with you how established players in the fund industry are actually using DLT in their business. I really don’t know who moved first and I hope you don’t care that much.
Vanguard, the only client-owned fund business, is deploying DLT technology in partnership with Symbiont to manage index data. The objective is to synchronize data from CRSP-based indices in a digital way and most importantly WITHOUT A TRUSTED INTERMEDIARY.
CRSP is the Center for Research in security prices and has been the source of data (inclusion-exclusion in an index and weighting) for Vanguard forever. The updating was done manually. When Vanguard decided to go digital for the updates, it went all the way. Using existing, established technology for automated updating without reconciliations would require trusting a third-party intermediary to host and manage the updating of the database. Instead, Vanguard chose to NOT entrust this sensitive data process to ANY one company. Symbiont`s DLT architecture is a shared ledger. For now, there are three participants, Vanguard, Symbiont, and CRSP but more than half a dozen other asset managers are thinking of joining as validators.
Calastone, is the largest global funds transaction network. They launched a few months ago their long-awaited Distributed Market Infrastructure (DMI) which is a new blockchain-based marketplace for fund administration. The vision is to get rid of the web of reconciliations and the ripple effects of batch processing of data.
The shared ledger (to be accessible to participants in the wholesale processing of funds) hosts the data and all needed will be handled by smart contracts.
At the launch the DMI is offering transparency in Order Routing, which means access to real-time trading activity. It is also offering an improvement for the settlement services of funds with a reduced number of reconciliations and improved global payment projections.
Vanguard 44yrs old
Symbiont 6yrs old
Calastone 12yrs old
Lots of testing has also happened and will continue. Several are out of Luxembourg naturally. Fundsquare which is a consortium and subsidiary of the Luxembourg Stock Exchange, in collaboration with FundsDLT, the Luxembourg blockchain-powered fund distribution platform for fund managers, has completed tests with BNP Paribas Asset Management and with Credit Suisse Asset Management and Natixis Asset Management ((separately).
Recently, Franklin Templeton announced their intention to use the Stellar Network to register share ownership of one their large money market funds (following SEC approval.)
I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.
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