First real blockchain transaction completed in fund distribution

The news comes after the asset manager announced its intention to be the first asset management player in the industry to use the FundsDLT platform by using blockchain technology across several of its business lines, taking advantage of great opportunities to enhance distribution mechanisms in the asset management industry.

FundsDLT is the result of collaboration between Fundsquare (a subsidiary of the Luxembourg Stock Exchange), InTech (a subsidiary of POST Group) and KPMG Luxembourg. The platform is being developed to enable asset managers to sell funds through a new distribution channel, while significantly reducing administration costs and the time to process transactions for both asset managers and other asset servicers. FundsDLT will streamline a range of fund administration and order-routing tasks by using blockchain to automate several processes in a secure manner. The model is applicable to a wide range of funds and does not depend on the jurisdiction.

The successful execution means that, for the first time in the fund industry, investors are using a blockchain based platform to purchase real funds’ shares with real cash. First, the investors use the FundsDLT mobile app to submit the standard subscription order for the shares. Via the API the order is transmitted to the FundsDLT platform and the information is immediately and simultaneously transmitted using blockchain technology to Natixis AM and the other parties involved in the transaction, each one having its own node on the FundsDLT blockchain. 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 Funds DLT platform. This change in the distribution chain marks a real revolution for distribution activities.

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 explains:

“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.”

Olivier Portenseigne, Managing Director of Fundsquare, comments:

“We are proud to have run the first real blockchain transactions in the history of investment funds. It was important for us to demonstrate that FundsDLT works in order to create the necessary trust that blockchain will answer the current needs of the asset management industry in terms of operational efficiency and digitalization. This will give our customers easy access to a powerful new generation of services.”

Arnaud Misset, Group Product Director at CACEIS comments:

“We are delighted to have contributed to the launch of this new Distribution Platform in Luxembourg built on blockchain technology and to have enabled our client Natixis Asset Management to be the first asset manager to distribute their funds range via FundsDLT.”

Fabrice Croiseaux, CEO of InTech, adds:

“We have developed a flexible and efficient API dedicated to the fund industry by using state-of-the-art technologies: a combination of blockchain and a microservice-based reactive platform. We look forward to see how far we can go in terms of performance and real time interoperability.”

Matthieu Duncan, CEO of Natixis Asset Management concluded:

“Natixis Asset Management is delighted to have contributed to this pioneering first blockchain enabled trade via the FundsDLT platform. We believe the potential for blockchain technology to enhance distribution mechanisms in the asset management industry is very significant.”

With the successful completion of the first transactions, the team is looking to investigate other use cases and applications in the field of B2B and B2B2C.

If you’d like to read more about FundsDLT’s solutions, please visit our website:

http://www.fundsdlt.net/

View a demo of FundsDLT: https://www.youtube.com/watch?v=r8NzJyY4v1E

Contact : 

Geneviève Feyt - KPMG Luxembourg

+352 22 51 51 2903 - genevieve.feyt@kpmg.lu