Unlocking the power of distributed ledger technology in fund distribution

Credit Suisse Asset Management is rapidly moving forward with digitalization and is investing in FundsDLT, a distributed ledger technology-based platform for investment fund distribution. The main winners are clients, who save time and money.

October 26, 2020

Henning Wechsung

Chief Digital Officer & Strategy

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Clearstream, Natixis Investment Managers, Credit Suisse Asset Management and the Luxembourg Stock Exchange (LuxSE) have announced a joint investment in the rollout of a new distributed ledger technology (DLT)-based platform for investment fund distribution initiated by the LuxSE affliate Fundsquare. Digital distribution of Credit Suisse Asset Management investment products in the future can thus take place via exchange-traded funds or via the new DLT-based platform.

The investment decision was made after a successful trial run on the prototype platform. The new platform is called FundsDLT. The name says it all: it’s all about investment fund distribution with the aid of DLT.

FundsDLT aims to streamline a range of fund administration and order-routing tasks by using distributed ledger technology to automate multiple processes in a secure manner. Find out more about FundsDLT in the Video.

Cheaper, faster and more transparent

The platform reengineers the fund distribution value chain and supports every step in the distribution process. FundsDLT eliminates redundancies, thus enabling actors in the value chain to cut costs.

FundsDLT platform

The FundsDLT Model 

In the traditional fund distribution model, the process runs sequentially. This means, for example, that although subscriptions or redemptions of fund units affect all actors in the value chain, the corresponding information follows with a time lag.

One critical advantage of a DLT-based platform is that it provides an absolutely synchronous view of the status of a transaction. Every actor involved always has the most up-to-date information. The transfer agent, the asset manager, the fund custodian, and the fund manager all see the current status of fund unit subscriptions and redemptions at all times. At the same time, the client is always in the know about the processing of his or her order.

Synchronized vision

Supplementation with additional services, such as from suppliers for Know Your Customer (KYC) procedures, can create a robust ecosystem for fund distribution. FundsDLT intends to provide its services for all products from all EU countries and for investors worldwide.

Jos Hehenkamp, the Credit Suisse Asset Management product management head for Switzerland & EMEA and a member of the FundsDLT board of directors, stresses that:

"FundsDLT opens new opportunities for our products because it offers a digital transaction solution that shortens the connection between the investor and the asset manager. It enables the investor to transact with our funds in a more accessible and transparent manner from anywhere. Whereas asset managers historically have built their distribution on decentralized infrastructure and processes, FundsDLT uses distributed ledger technology and smart contracts to dramatically improve processing of the shared issuer register, bringing significant efficiencies to the funds industry."

Strategic investment

Credit Suisse Asset Management views its stake in FundsDLT as a strategic investment. The platform facilitates fund distribution and will act as a marketplace for digital distribution that will supplement traditional distribution channels and will thus foster growth in assets under management.

"We expect our investment in FundsDLT to yield efficiency gains across the entire value chain – e.g. instant processing – as well as cost reductions for end-investors",
explains Michel Degen, Head of Credit Suisse Asset Management Switzerland & EMEA.

He adds that “FundsDLT benefits both institutional and private investors and promotes the democratization of investing, which we have been championing.” Alongside the advantages for investors, FundsDLT will facilitate and accelerate the development of new distribution channels.

In new Scope

Driven by disruptive innovation, the far-reaching changes taking place in asset management would have continued even without the COVID-19 crisis. The impact of the pandemic will nevertheless speed up this process of change, because the challenges have grown again at a global level.

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