Vanguard Successfully Digitizes Asset-Backed Securities Using Blockchain
Vanguard, the world’s second largest index fund manager, announced the successful completion of the first phase of its blockchain pilot testing the digitization of asset-backed securities (ABS).
In the pilot, Vanguard partnered with a large U.S.-based ABS provider, distributed accounting technology provider Symbiont, and financial institutions BNY Mellon and Citi to model the entire securities settlement life cycle using a distributed accounting technology (DLT) network
Vanguard and Symbiont anticipate that subsequent phases of the pilot will integrate smart contracts into the ABS issuance and settlement process, offering „increased information flow, improved price and liquidity discovery of the secondary market“ and automated execution of „key corporate actions.
As of April 30, Vanguard managed $5.7 trillion in assets worldwide, offering more than 425 funds to 30 million investors.
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Warren Pennington, head of Crypto Cash Investment Management Strategy Group, said the pilot program aims to be „a more efficient business model for future capital markets.
„By digitizing and streamlining the ABS issuance process, we can reduce costs and minimize exposure to the list while improving the speed and transparency of transactions.
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Mark Smith, CEO of Symbiont, described the pilot program as „an important step forward in fundamentally changing the capital market infrastructure through blockchain technology“ and added:
„2020 may be the first time that market participants will see live publications based on accounting books.“
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Symbiont and Vanguard partner in 2017
Vanguard first partnered with Symbiont in December 2017, revealing an initiative to leverage blockchain technology to improve the distribution of price index data. The platform went live last year, with Vanguard using Symbiont DLT technology to consume $1.3 billion in total fund data.
In October 2019, Vanguard Group announced that it had begun testing Symbiont’s technology for P2P crypto coin exchanges.