Calastone has completed the first phase of its distributed market infrastructure proof of concept (PoC) to test the feasibility of using blockchain to develop a common global marketplace for the trading and settlement of mutual funds.

In doing so, Calastone becomes the latest in line among a number of other corporates pursuing blockchain and distributed ledger-based proof of concepts, demonstrating the multitude of possible applications blockchain technology has within the finance industry.

For a few recent examples, back in January PBoC completed a trial run of digital currency based on blockchain technology. Then in March, the Monetary Authority Singapore announced the successful conclusion of a proof-of-concept project to conduct domestic inter-bank payments using distributed ledger technology, in partnership with R3 and a consortium of financial institutions, including international banks.

That same month, Deloitte said that it had been working with the Hong Kong Monetary Authority and trade finance banks in Hong Kong to develop a distributed ledger proof of concept for trade finance. Meanwhile, PwC announced that it was working with Alibaba’s Australian subsidiary to develop a blockchain-based framework for preventing fraud in the supply chain of food products traded on Alibaba’s platform.

This was followed in April by Swift announcing the development of a proof of concept application that will test whether distributed ledger technology can be used by banks to improve the reconciliation of their nostro accounts in real time to optimize global liquidity.

According to Calastone, their latest distributed infrastructure model proved capable of processing transactions equivalent to a full day’s trading sourced from across Calastone’s global transaction network, which spans over 1,200 fund distribution and fund manager clients across 34 markets.

“Successful initial testing, involving a large volume of trades across a fully representative global market universe, has given us a powerful understanding of how to optimise the distributed ledger technology to reduce the frictional cost of trading across the industry on a global scale, says Campbell Brierley, chief information officer of Calastone. “Placing the market on a blockchain effectively opens the door for potential efficiencies across the whole transaction lifecycle in excess of those that could be achieved via the optimisation of transaction processing alone.”

He continued, “The encouraging results of the initial blockchain proof of concept allow us to look confidently to a future where participants currently connected to the Calastone Transaction Network could seamlessly migrate to this distributed market infrastructure.”

Calastone has announced a second phase to its proof of concept, and is now engaged with a number of design partners drawn from its global client base. “The design partners will help us test the model and understand the business challenges and requirements from a market participant perspective. It’s through technological innovation such as this that we aim to address the business and technical trading challenges faced by our customers across international markets,” says Ken Tregidgo, Calastone deputy CEO.

“The positive results of our PoC has shown that by using distributed ledger technology across the entire lifecycle of mutual fund transactions, from order placement through to the settlement and payment, industry participants could significantly benefit from simpler processing,” says Tregidgo.