BNP Paribas Asset Management and its sister company Securities Services have used blockchain technology to complete a full end-to-end fund transaction test. This means the companies may become custodians when the ASX becomes the first exchange in the world to adopt the technology later this year.
The test was conducted using BNP Paribas Securities Services’ Funds Link and FundsDLT blockchain platforms. The two platforms were developed alongside the Luxembourg Stock Exchange’s InTech, Fundsquare, and KPMG Luxembourg.
The development means the company will use the new system on behalf of clients to settle counterparty transactions.
The companies will be using a system built with newer technology and companies will need interfaces - the ASX is likely to offer different methods of achieving this. The ASX is expected to confirm the one-day functionality in March, however we won't see the benefits until after launch.
Investors can expect a solution to improve end-to-end automation of settlement flows, election and payment process, and many more automated functions.
The ASX has said that they were designing a solution with investor needs in mind. The changes will likely lead to innovation in the new products available to investors, and open up offerings for Australia. There is no additional risks predicted by the technology.
BNP Paribas has invested in three companies with blockchain as a key technological component:
- Digital Asset Holdings – technology provider for the ASX project
- R3 – developing the Corda protocol and exploring numerous uses of Blockchain within the financial industry
- Liquidshare – focusing on developing new market infrastructure for SMEs shares in Europe