Distributed ledger fund settlement utility Fundnode launched by industry group

FUNDNODE, a new distributed ledger fund settlement utility, was launched on Wednesday (Aug 31) by public-private partnership group The Singapore Funds Industry Group (SFIG) to improve the efficiency of funds settlement in Singapore.

The new utility, which leverages the distributed ledger technology, will provide a single platform for market participants, such as distributors, fund managers, transfer agents and fund service providers, to "seamlessly conduct multiple activities across the settlement process".

A distributed ledger is a database that is spread out across different locations, and even amongst various participants. Its decentralised nature helps remove the need for a central authority or intermediary for processing, validating, or authenticating transactions. Blockchain, for example, is a form of distributed ledger, although both diverge on some levels in the way that data is linked.

Currently in its pilot phase, Fundnode is expected to be operational next year. It will begin by streamlining fund processes, facilitating simplified subscription, redemption, and record-keeping workflows for funds offered to retail investors.

Participants in the pilot phase include fund managers, transfer agents and service providers, as well as Central Provident Fund agent banks. Fund distributors, including DBS, OCBC and UOB, will also be joining the utility's pilot phase.

Fundnode will be owned and operated by Marketnode, a joint venture between SGX Group and Temasek.

SFIG believes the new settlement alternative will significantly reduce manual steps, centralise processing and facilitate reconciliation of flows, thereby reducing settlement time and improving efficiency.

At the same time, the group has also issued a set of code of conduct guidelines for fund directors, which sets out to establish a set of "core principles and best practices to promote professionalism, oversight and governance of funds among Singapore fund directors".

The code of conduct will be used as a framework to structure industry-driven training and accreditation programmes, in the hope that this will better prepare fund directors to navigate the operational, regulatory and tax environment, and fulfil their governance obligations effectively, said SFIG.

"With the ongoing trend of digitisation, these initiatives not only help funds and asset owners remain competitive with a robust legal regime and favourable tax environment, but also continue to strengthen Singapore's position as an international funds centre," said Kai-Niklas Schneider, co-chair of the SFIG executive committee.

Established in April last year, the SFIG is a partnership between the Monetary Authority of Singapore (MAS) and funds industry stakeholders. The group aims to identify emerging industry trends and formulate strategies to develop the asset management ecosystem.

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