Thursday, 30 March 2017
Last updated 4 hours ago
Feb 23 2017 | 10:52pm ET
Global financial services giant Northern Trust has collaborated with IBM to launch what it is describing as the first commercial deployment of blockchain technology for the private equity market.
The two companies, along with additional stakeholders, have built a security-rich distributed ledger solution based on the open-source hyperledger fabric that is available for use in administering a private equity fund managed by Geneva-based Unigestion, according to a statement.
The infrastructure supporting private equity has seen little innovation in recent years at a time when investors are seeking greater transparency, security and efficiency, improvements potentially possible through blockchain technology.
The blockchain network provides real-time insight and transparency to all parties, including the fund managers and investors as well as allowing regulatory access when required, the statement said. Importantly, the blockchain network has been designed to support compliance with current local regulations.
The new application provides for the transfer of ownership stakes in the fund and for it to be managed, serviced and audited throughout the investment lifecycle on a transparent platform. Initially, Northern Trust will make the solution available to clients on a selective basis, according to the company.
“Current legal and administrative processes that support private equity are time consuming and expensive,” said Peter Cherecwich, president of corporate & institutional services at Northern Trust. “A lack of transparency and efficient market practices leads to lengthy, duplicative and fragmented investment and administration processes. Northern Trust’s solution is designed to deliver a significantly enhanced and efficient approach to private equity administration.”
“Northern Trust anticipates substantial opportunities to bring improvements to the private equity market by using blockchain technology,” said Justin Chapman, global head of market advocacy and research at Northern Trust. “This is an important first step to connecting participants much more effectively, including investors, managers, administrators, regulators, advisors and auditors.”
Founded in Chicago in 1889, Northern Trust Corporation is a provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. As of December 31, 2016, Northern Trust had assets under custody of $6.7 trillion, and assets under management of $942 billion.