Investors purchased shares in Natixis Asset Management funds using “the blockchain-powered fund distribution platform for fund managers, FundsDLT,” the companies announced on 7 July.
According to the press release:
“The transfer agent--in this case CACEIS--is the first to act by confirming the transaction and logging it as ‘approved’ or ‘declined’. Approval triggers the clearing and settlement processes: all of which take place on the FundsDLT platform. This change in the distribution chain marks a real revolution for distribution activities.”
It continued:
“The cash and payment process was handled using S-money (part of Groupe BPCE). Investors topped up their S-money account with sufficient funds to cover the transaction before completing the order. S-money APIs were a major contributor to this success, as they allowed for the movement of money via state-of-the-art technology. This real transaction has paved the way for a new financial services model.”
Said Fihri of KPMG Luxembourg stated in the announcement:
“It is really exciting to be part of such a tremendous step forward. We not only replicated trades in the blockchain; we moved real cash and invested in a real fund. We are close to having an industrial product that could be used in different configurations: distributors, IFA, robo advisors and D2C.”
The companies said that these were the first such transactions in the investment fund industry.
What is blockchain?
Blockchain is the online tool that powers crypto-currencies like bitcoin. Ultimately this currency works via secure, shared online lists of transactions. When information is changed, every user can see what has been altered and by whom.
Advocates of crypto-currencies point to it being run by the users, without the intervention of middleman central banks.
So if a virtual currency is possible, then one can represent other financial securities online, as well as packaged products like investment funds and insurance and dematerialised contracts.
What is FundsDLT?
FundsDLT is a blockchain-based digital fund distribution platform for asset managers publicly launched in December 2016. It is led by Fundsquare (the Luxembourg Stock Exchange’s fund services subsidiary), InTech (a subsidiary of the Post Group) and KPMG Luxembourg.
Several dozen local players are either part of the consortium working on this project, or are observers. A prototype blockchain engine for clearing and settlement has been created and tested, with a view to achieving an industrialised minimum viable product by mid-2018.
DLT stands for the “distributed ledger technology” that was developed to power crypto currencies.
With reporting by Stephen Evans