Skandinaviska Enskilda Banken AB (SEB), a Sweden-based bank has joined hands with Nasdaq to test a new fund trading platform based on blockchain technology.

Blockchain is slowly and steadily creeping into more and more verticals of our lives. For the uninitiated, a blockchain is an anonymous online ledger that makes use of a data structure to make the process of transaction an easier and simpler process. It provides users the ability to manipulate the ledger in a safe way without seeking the support of a third party.

In the past, we have covered various stories on how the technology is invading financial institutions like banks and electronic voting systems in several countries, including India. Recently, we also carried an article about how Blockchain is blurring the lines between technology and nature through a new species called Plantoid, a new digital plant, which is designed to reproduce itself via transactions made on the blockchain.

With this new association, SEB and Nasdaq aim to increase efficiency in the processing of purchases and sales of fund units – an area which even in today’s progressive age of tech is largely dominated by long lead times, order via fax and lengthy manual routines. They’re hopeful that by employing Blockchain, they will be able to create a faster, more effective and reliable way of handling of flows in funds.

“With the help of a blockchain we can create a faster, simpler, more effective and reliable handling of flows in funds,” said Göran Fors, acting head of Investor Services and in charge of the cooperation with Nasdaq in a press release.

A prototype for the new fund platform has already been developed. According to both the parties, the main idea behind conceiving the platform is that, the various market actors, distributors, fund companies and others will be able to share a distributed database on which all transactions and changes will be immediately registered and known by all participants.

”We will together with Nasdaq continue to develop the technology and we have also opened up for collaboration with additional interested parties. This is a matter of developing a uniform market infrastructure, and therefore we welcome collaboration with all actors working in the market,” Fors added.

The Sweden fund market functions sans a Central Securities Depository (CSD), unlike the equity market. Furthermore, the administration of purchases and sales of fund units is largely manually handled between the participating parties. Since a transaction chain consists of multiple steps, it requires a relatively large administrative process. Currently, this process is being handled through a combination of different technical solutions, including orders placed by fax and follow-up done by phones. With a Blockchain fund trading platform, this process can become a lot less tedious.

Experts feel that the platform will not only benefit the market, but it will also have a major impact on fund investors, among other things through faster feedback from purchases and sales.

While we don’t know when the platform will go live, one thing is for sure this is just the beginning for blockchain in the world of mutual funds.
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