Ken Tregidgo, deputy chief executive of Calastone, said
significant cost savings could be made by using distributed market
infrastructure, as reported
by the Financial Times.
Distributed market infrastructure would overcome the need for multiple actors
to manually input the same transaction data multiple times, which is
time-consuming and error-prone.
“That is a cost that is being paid and is ultimately being paid by
the end investor, by you and me,” said Tregidgo.
“There is £1.9 billion that is being burnt in the cost of buying
the fund rather than accruing and adding value to the investor,” added Andrew
Tomlinson, chief marketing officer at Calastone, as reported by the Financial Times.
to the company: “Calastone’s network connects more than 1,300 financial service
organizations across 34 global markets processing over £80bn of trades and 7
million messages each month, making it the world’s largest global fund
Calastone’s previous efforts to partly automate its transaction
network have already had a significant impact on the global funds market. A
recent research report by Forrester, titled “The Total
Economic Impact of Calastone On The Global Mutual Funds Market,” revealed
that transaction automation through Calastone permits saving £5.28 in cost
efficiencies for each order and has delivered £458 million in savings over the
previous six years. The report, commissioned by Calastone, includes a global
market survey of 234 mutual funds organizations with an analysis of the role
and impact of automation on the transaction life cycle.
Forrester’s analysis found five important benefits for fund
operators using Calastone’s automated transaction network: improved process
times, a reduction in manual errors (and the time required to address them), the
ability to scale and process greater volumes of trades via increased
flexibility in trading windows, faster response times, and greater transparency
via better audit traceability.
Calastone’s internal follow-up analysis, based on Forrester’s
findings and a 2016 study by Deloitte titled “Europe’s
fund expenses at a crossroads; The benefits of mutualizing the cost of
distribution,” showed that Calastone’s own forthcoming, blockchain-enabled
distributed market infrastructure (DMI) could deliver additional cost
efficiencies of over £1.9 billion worldwide.
In December 2017, Calastone announced that its
global transaction network would be migrated onto a private and permissioned
blockchain technology infrastructure. The announcement followed the successful
in June, of the first phase of Calastone’s blockchain-enabled DMI proof-of-concept
(PoC). This PoC demonstrated the feasibility of using blockchain technology to
create a global marketplace for the trading and settlement of mutual funds.
“Our services have introduced significant operational and cost
efficiencies into the sector and as we scale our business for the future, we
are ensuring we have the connectivity and technology to continue to service the
increasingly sophisticated demands for efficiency, value and speed,” said
Calastone CEO Julien Hammerson. “In making this first step using
blockchain [technology], we are providing our customers with the requisite
tools they need, to be future-ready.”
“Whilst the potential for long term change is great, the migration
path for customers to take advantage of the future infrastructure will remain
seamless, enabling clients to move when they are ready,” added
Tregidgo. “A blockchain-enabled marketplace means alleviating operational
inefficiencies, increasing performance and generating greater savings — a
win-win for everybody.”
October 2017 interview, Tregidgo elaborated on the potential of the
blockchain and Calastone’s plan to provide easy access to its customers.