The firm's network connects more than 1,300 financial services firms across 34 markets and processes more than £80 billion ($107.7 billion) in fund transactions each month.
Calastone has said its funds transaction network will be migrated onto a blockchain-based platform in 2019, in the latest push by a funds industry participant to use the technology underpinning bitcoin.
Calastone, whose network connects more than 1,300 financial services firms across 34 markets and processes more than £80 billion ($107.7 billion) in fund transactions each month, in June successfully tested a blockchain-powered service for trading and settling mutual funds.
“In making this first step using blockchain, we are providing our customers with the requisite tools they need, to be future-ready,” Julien Hammerson, chief executive of Calastone, said.
Blockchain technology rose to fame in 2009 when the crypto-currency bitcoin was born.
A blockchain is a virtual distributed ledger of transactions shared peer-to-peer that can record ownership across a public network of computers rendered tamper-proof by advanced cryptography.
The technology is causing a stir within the financial services sector as its supporters believe it could reduce hidden expenses in the financial system by ousting inefficiencies across areas such as payments, syndicated loans and equity clearing.
The mutual funds market is a sector challenged by operational inefficiencies, costs and risk, Calastone has said, and this often results in “an inability to meet fast-evolving customer demands”.
The industry is also laden with regulation and associated costs, and more red tape is set to be rolled out in the coming year when MiFID II and GDPR enter into force, both of which are expected to add billions of dollars to European fund managers’ compliance bills.
“As an industry sector under increasing cost, operational and regulatory pressures… Calastone recognises that blockchain can provide much needed relief for the funds market in reducing the cost of friction-free trading and the total cost of ownership, whilst delivering the speed of service and regulatory transparency, which will soon be a basic pre-requisite worldwide,” Hammerson said.
While banks have traditionally steered clear of bitcoin, they are now spending millions on blockchain-related ventures.