JP Morgan's blockchain unit Kinexys has unveiled an offering that promises to enable the seamless distribution and servicing of alternative investment funds.
The bank has already worked with fund administrator Citco to carry out the first transaction on the new Kinexys Fund Flow solution. A broad rollout of the technology is expected next year.
Fund Flow collects, harmonises and records investor register and transactional data on the Kinexys Digital Assets private, permissioned blockchain network. This, says JP Morgan, provides granular transparency into investor, fund and capital activity data, and facilitates the funding of capital calls and distributions using the Kinexys Digital Payments scalable blockchain deposit account network.
The bank claims that by streamlining operations and automating capital activities Kinexys Fund Flow could allow JP Morgan Private Bank clients to access world-class alternative investment strategies without the cost of unnecessary feeder funds or compromises on an open-end versus closed-end fund structure.
On Kinexys Fund Flow, tokenisation of the investor register and transactional data enables near-instant settlement. Fund managers, transfer agents and distributors maintain a shared ‘at-the-source’ view of individual holdings as well as the real-time funding status of their capital calls or subscriptions.
Smart contracts and programmable payments provide an automated way to move cash from individual investor brokerage accounts at JP Morgan Private Bank to fund managers with full transparency, greater speed and without the need to rely on wire services.
Anton Pil, head, global alterative investment solutions for JP Morgan Asset Management, says: “The Kinexys Fund Flow solution - developed in-house at JP Morgan - is an important step in transforming how our clients allocate and manage private fund portfolios. Enabling real-time tri-party settlement between fund managers, transfer agents and distributors will ultimately unlock new sources of liquidity and more flexible portfolio construction."
Albert Bauer, CTO, Citco, adds: “This transformative solution addresses the industry's longstanding challenges of siloed data systems and manual reconciliations that have limited scalability. By leveraging blockchain technology and smart contracts, it improves the experience and outcomes for investors while significantly reducing operational inefficiencies."