Calastone, a financial technology company which facilitates 12,000 active trading connections and more than 1,200 customers to process domestic and cross-border transactions, has successfully carried out the largest-scale test of Blockchain technology in the fund industry.

Ken Tregidgo, deputy chief executive of Calastone, revealed that the proof-of-concept network of Calastone processed a full day’s trades of its client base that covers over 1,200 fund distribution and fund managing institutions throughout 34 countries.

Cost reduction and scalability

The long-term strategy of Tregidgo and the Calastone development team is to reduce costs involved in the processing of trades, messages and transactions within the global fund industry and market. The migration of trades from offline to online is said to allow Calastone and the rest of the companies in the industry to automate trades, rather than manually approving and verifying trades.

By significantly cutting operating costs, Calastone aims to help its clients and others in the industry to maximize profits and meet the expectations of its investors.

Calastone has already completed phase one of its network test with cooperation from its existing client base and aims to complete phase two of the development.

In the later stages of development and implementation, Calastone plans to work with a wider range of clients in the industry to ensure that the Calastone network, designed for the fund industry and its key players, provides solutions to some of the most difficult issues the industry has dealt with in the past decade, including cost reduction and scalability.

In an official statement, Tregidgo said:

“We believe the introduction of our distributed market infrastructure can be transformational for the fund industry. Moving to this model will realise significant benefits to the fund market on a global scale, reducing the frictional cost of trading to the benefit of all players in the market.”

Real-time processing of information

Two of the most important features, characteristics and advantages of Blockchain technology is its ability to process, secure and facilitate the transfer of data in a transparent and decentralized ecosystem. Because of its decentralized nature, Blockchain technology also allows real-time processing of information which is crucial for an information technology company like Calastone.

Operations of most intermediaries and financial technology companies in the fund sector revolve around the management of data. There already exists a variety of technologies that companies like Calastone can use to process data at a rapid rate.

However, the necessity of Blockchain technology has become evident for companies within the fund industry due to the obvious security flaws and issues of existing infrastructures. Additionally, only a limited number of technologies are capable of facilitating trades, transactions and messages across a global network in real time.

Olivia Vinden, the principal of wealth and asset management consultancy firm Alpha FMC, told FT:

“Fund dealing is a great candidate for Blockchain technology. It could cut costs and make things more efficient.”