Top mutual fund firm The Vanguard Group, Inc. unveiled a plan last week to incorporate blockchain smart contract technology into some of its indexing operations beginning early next year. Vanguard’s initiative will be carried out through a partnership with the Center for Research in Security Prices (CRSP) and technology provider Symbiont and is intended to simplify Vanguard’s index data sharing process. By utilizing a dedicated blockchain network created by Symbiont, Vanguard hopes to make CRSP data available to investment managers on a nearly instantaneous basis.
Vanguard’s plan comes at a time when many large financial institutions are hesitant to fully commit to incorporating blockchain’ s untested technology into financial systems that are already subject to daily cyber threats. However, Vanguard believes that its use of blockchain will allow it to distribute sensitive and time-critical index information in a secure manner not possible under its current system, which relies on providers such as CRSP to send manual updates of fund data to investment managers throughout the day. By automating workflows and the delivery of such data via a blockchain, Vanguard hopes to expedite data delivery while also reducing risks that stem from manual updates.
Vanguard’s announcement coincided with a report that Barclays, Credit Suisse, KBC, SIX, and Thomson Reuters will also attempt to utilize blockchain technology to simplify the sharing of data. The pilot program launched by these companies is designed to streamline the distribution of compliance information by taking advantage of the already existing Ethereum blockchain network.
Vanguard’s press release discussing its collaboration with CRSP and Symbiont is available here.