Natixis Asset Management Completes Landmark Blockchain-Based Fund Transaction

Jul 6 2017 | 8:56pm ET

Natixis Asset Management has reportedly become the first asset manager to utilize the FundsDLT blockchain-powered platform to distribute fund shares to investors that purchased them for cash, a landmark accomplishment as distributed ledger technology works its way into the back office of global finance.

The company sold an unspecified number of fund shares through the FundsDLT platform, a joint development of Luxembourg Stock Exchange unit Fundsquare, KPMG’s Luxembourg affiliate, and software company InTech. The platform settles transactions using an internal blockchain, relatively similar to the one utilized by bitcoin, to clear and settle trades using nodes operated by Natixis and other partners in the transaction.

While similar in structure to bitcoin’s blockchain, private distributed ledger systems don’t rely on nodes massively distributed across millions of computers, but rather a limited number of authorized ones belonging to participants in the network. In this case, the nodes play the role of transfer agent, confirming the transaction is legitimate by solving a complicated set of algorithms. Once confirmed, the platform uses smart contract technology to initiate the clearing and settlement process. Since the transaction exists in real time simultaneously on each node’s copy of the FundsDLT blockchain, the transaction record is at once secure and immutable.

The event marks the first time investors used a blockchain-based platform to purchase actual shares in a real fund with cash, the company said. Eventually, distributed ledger technology is expected to enhance distribution as well as dramatically reduce administration costs and processing times for a wide range of financial and asset management transactions and functions.

Based in Paris, Natixis Asset Management manages approximately €359 billion as of March 31, 2017. It is part of Natixis, the international corporate, investment, insurance and financial services arm of France’s Groupe BPCE. Natixis is one of the backers of the R3 distributed ledger consortium that raised $107 million earlier this year.  

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