Andy Hutchings Broso, the founder of the APIR Systems fund-coding business, and Gordon Little, a securities services executive at RBC, have launched a blockchain-driven company which allows participants to share all sorts of additional information to the transactional data on which this nascent sector has so far been concentrated.
Hutchings started the pioneering APIR Systems, based in Canberra, in the 1990s, and moved to Hong Kong a few years ago to set up an Asian expansion. He still lives in Hong Kong but sold his stake in APIR last year to allow him to concentrate on the new venture. Little had spent nine years at RBC Investor & Treasury Services, and before that at PWC followed by Deutsche Asset Management, in Sydney, where he is still based.
Little said last week that the new company, BC Gateways, allowed participants in a ‘private’ blockchain to share information in a secure environment. This could include regulatory reporting, tax information, prospectuses and PDSs, unit prices and other “unconstructed” data. With regulatory reporting, this can include the nitty gritty of underlying investment details required by APRA’s RG97.
“Andy [Hutchings Broso] saw this unique window,” Little said. “He knew the industry needed a different data distribution model and realised blockchain was the key so, he set about designing and building the solution.”
Little had been exposed to blockchain during his time at RBC and understood its potential.
“We have since talked to a lot of different people about how it could reduce risk and lower costs associated with distribution of data. We want to be a new-age business not an old-age business. We want to be fully digital and not propping up a legacy world. We are being very careful about who we partner with.”
The difference between a private blockchain and a public one is the level of trust. You have to be invited into a private one, such as that which the ASX is working on, and while public blockchains can also be secure, there’s a different level of confidence over that security.
“Under a private blockchain like ours, we create the infrastructure and the participants self-police,” Little said. “You incentivise people for good behaviour.”
BC Gateways launched in April this year with 12 foundation partners. They are: Aberdeen Standard Investments, Castle Hall, Equity Trustees, Fidelity International, FundHost, GSFM, IRESS, Milestone, Pengana Capital, Platinum Asset Management and Schroder Investment Management Australia.
“Everyone is giving us good feedback,” Little said.
According to research conducted by BC Gateways among financial institutions, data distribution remains fraught with inefficiencies exposing companies and customers to financial, regulatory and commercial risk. The firm’s findings include:
. About 53 per cent of data for underlying funds still comes through via email
. 77 per cent of respondents indicated that unlisted unit data cannot be sourced from a single provider
. 70 per cent claimed the data was not always completely accurate, and
. 64 per cent said that data received often failed to meet time requirements.
In response to these findings, Little said back at the launch: “Now more than ever before, the industry is actively working towards solving issues around data distribution to reduce risk and build processes that really improve consumer outcomes. By embracing The Gateway, the Australian industry has the opportunity to leapfrog other countries and position itself as a leader in the smart use of innovative technologies.”
Greg Bright is publisher of Investor Strategy News (Australia)