Calastone takes on rival in fund transaction system
Calastone, the cross-border fund transaction network, has announced a rival fund transaction settlements system to Euroclear as the drive to automate processing continues.
Platforms Cofunds and Nucleus and fund providers Henderson Group and Schroders have already signed letters of support for the system, Calastone said.
Administration giants IFDS and Capita would be supporting clients if they chose to use it, the firm added.
Calastone said it was seeking to compete with Euroclear by developing a cheaper offering for smaller fund managers, as well as a different model for primary market transactions.
The Calastone model will calculate net settlement positions for counterparties with an automatic notification of where fund units are registered.
The firm expects to launch the system by the end of the first quarter of next year.
Dan Llewellyn, head of market standards at Calastone, said: "The Calastone settlement approach will offer a cost effective, transparent model designed to calculate net positions for each counterparty to settle accordingly. This model will be designed to be easy to adopt, scale and integrate into existing back-office systems."
He said the Calastone settlement solution would promote open architecture and that counterparties would therefore not be required to be participants of Calastone's transaction network.
He added: "Any member of the mutual fund community can participate and benefit from increased automation and reduction in settlement risk."
Ken Tregidgo, business development director at Calastone, said: "Throughout the consultation process, we were surprised at the degree of discontent with the incumbent settlement model. We are grateful for the level of commitment from these firms and their eagerness to be involved with scoping out a more flexible and cost-efficient approach.
"This is in line with the regulators' ambitions for greater cross-border transactions and harmonisation, and our approach will be designed to be entirely interoperable with any regional settlement models.
"The more efficient the approach, the greater the potential for growth in transaction and settlement volumes, which can only benefit the mutual fund industry."
