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Calastone and Schroders partner on tokenised investment vehicle

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By Reporter
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3 minute read

Global funds network Calastone has announced a collaboration with asset manager Schroders to explore the capabilities of a tokenised investment vehicle for variable capital companies.

Calastone said the collaboration with Schroders comes after a multi-year investment into distributed ledger technology (DLT) and tokenisation. The company added its goal is to manufacture and distribute tokenised investment vehicles through Calastone’s Distributed Market Infrastructure.

Adam Belding, chief technology officer at Calastone, said: “We’ve been working with DLT for many years, exploring different types of DLT and looking for the use cases where it can add real value.

“Tokenising fund units will not provide the transformation that the industry is looking for, however, operating collective investments on a native DLT platform and applying DLT and tokenisation at all levels of the fund from trading to administration and distribution, provides a much more fundamental transformation.

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“Our work with Schroders shows that this future could be much closer than some imagine. We believe that used in the right way, DLT is a powerful platform for providing, managing, securing, and distributing tokenised assets, helping to unlock meaningful improvements in operational efficiency and product innovation.”

According to Calastone, digitalising the core operations of collective investment vehicles presents the opportunity to create better value for investors by reducing costs, while also allowing for more flexible investment products that are aligned to digital experiences that consumers find elsewhere.

Peter Hilborne, chief operating officer, operations at Schroders, said: “We are in a transformative era where distributed ledger technology will redefine finance with a positive impact on asset management.

“At Schroders, we understand the vital role tokenisation and digital assets may play in modern economic arrangements, and we are delighted to be working with Calastone to contribute to the advancement of the digital asset ecosystem. We look forward to collaborating with various industry players to bring this pioneering technology to market, ushering in an era of exciting possibilities.”

A 2022 BNY Mellon report, Migration to Digital Assets Accelerates: 2022 Survey of Global Institutional Clients, which surveyed institutional investors, found that 97 per cent of respondents agreed that tokenisation “will revolutionise asset management”.

In a white paper that Calastone released in May, the firm said the industry was plagued by unwieldly manual processes and high costs that prevent asset managers from “meeting customers’ evolving expectations and needs”.

To truly transform the process of investing, Calastone said, the industry needs to think about tokenisation not as a new technology, but as a “transformative tool to create a frictionless digital marketplace for asset management”. The answer is tokenising the underlying assets of funds, rather than just the units.

Mr Belding added: “The current efforts of industry players are a good start and show recognition that tokenisation is beneficial in asset management.

“Ultimately, however, approaches which do not utilise tokenisation at the asset level will not affect real change long-term as they fail to address fundamental issues with the underlying structure.”

Calastone and Schroders partner on tokenised investment vehicle

Global funds network Calastone has announced a collaboration with asset manager Schroders to explore the capabilities of a tokenised investment vehicle for variable capital companies.

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