Nasdaq Inc. is teaming up with Swedish financial services firm SEB to develop a blockchain prototype for trading mutual funds.
The firms announced Wednesday they will participate in a joint project that aims to increase back office efficiency in the processing of mutual fund trades by creating a private blockchain that would allow various market participants, including fund companies, distributors, and others, to share a distributed database that registered all transactions in real-time.
Unlike the equities market, the Swedish fund market doesn’t have a central clearing and settlement organization. As a result, the existing infrastructure for processing fund trades is largely a manual, paper-driven process.
“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,” says Magnus Haglind, SVP and head of product management, market technology, at Nasdaq, in a statement. “This development will look to benefit the fund market and, in the end, also the individual investors through faster response from purchases and sales.”
“With the help of a blockchain we can create a faster, simpler, more effective and reliable fund market,” adds Göran Fors, acting head of investor services at SEB. “Funds are increasingly important for our clients and it is with great pleasure that we can announce this important project together with Nasdaq.”