France's Natixis Asset Management claims it has made the first “real” blockchain transaction completed in fund distribution, as investors purchased shares in its funds via the technology.
Natixis announced last month that it would be the first asset manager to use the FundsDLT platform, a blockchain-powered fund distribution platform.
Investors use the FundsDLT mobile app to submit a subscription order for shares, which is then transmitted to the FundsDLT platform and simultaneously broadcast to Natixis and other parties.
The transfer agent will then confirm the transaction, which triggers the clearing and settlement processes which all take place on the platform.
“We believe the potential for blockchain technology to enhance distribution mechanisms in the asset management industry is very significant,” said Natixis Asset Management's chief executive Matthieu Duncan.
Used in fund distribution, the technology can significantly reduce administration costs and the time taken to process transactions by streamlining and automating actions.
FundsDLT was set up as a collaboration between Luxembourg Stock Exchange subsidiary Fundsquare, Post Group subsidiary InTech and KPMG Luxembourg.
“We are close to having an industrial product that could be used in different configurations – distributors, independent financial advisors, robo advisors and direct-to-consumer,” said Said Fihri of KPMG Luxembourg.
Natixis are not the only players in the fund management industry to be exploring blockchain. Earlier this year, fund administrator Northern Trust applied the technology to a fund managed by Unigestion.
At the time, Unigestion's head of operations said the system was being used mainly for record-keeping, so all parties could see information in real time, but the firm hoped that transactions would be carried out via blockchain in the future.
Blockchain is essentially a distributed ledger technology, which any number of parties can be granted access to through their “node” (a computer which is connected to the network).
When a transaction is entered onto the blockchain, all nodes must agree that this transaction occurred – which they do through a complex set of algorithms.
A copy of the blockchain is stored on every node, meaning that if one ledger fails, no data is lost.
Having completed the first transactions, the FundsDLT team are now looking to investigate other uses of its technology in the business-to-business and business-to-business-to-consumer spaces.
Read more: Blockchain: Getting down to basics