Nasdaq and SEB have teamed up to test a developed prototype for mutual fund trading platform based on blockchain technology.
The Swedish fund market is largely characterized by manual routines, long settlement cycles, and paper driven processes. Due to the lack of a central, primary point for registering holdings, the administration of purchases and sales of fund units are handled through an intermediary or directly with each executing party which involves paper driven processes and follow-up phone calls.
The joint project aims to enhance the efficiency in the processing of purchases and sales of fund units and to create a unit ledger. By subscribing to a private blockchain, the various market participants—fund companies, distributors and others—will be able to share a distributed database in which all transactions and changes are registered among all participants in real-time.
“With the help of a blockchain we can create a faster, simpler, more effective and reliable fund market,” said Göran Fors, acting head of Investor Services at SEB. “zunds are increasingly important for our clients and it is with great pleasure that we can announce this important project together with Nasdaq.”
SEB and Nasdaq have developed a prototype for a new fund platform. According to the terms of the cooperation agreement, SEB and Nasdaq will continue to develop the technology with the end goal of creating a working prototype, which will be based on the Chain.com blockchain ledger.
“By leveraging blockchain technology there is strong potential for improvement via digitalization that can reduce manual work, create a faster process and reduce the risk for errors,” said Magnus Haglind, SVP & Head of Product Management, Market Technology, Nasdaq. “This development will look to benefit the fund market and, in the end, also the individual investors through faster response from purchases and sales.”
SEB and Nasdaq have also opened a channel for collaboration with other interested parties on building a uniformed market infrastructure for Sweden’s fund market.
