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Vanguard Taps Symbiont's Private Blockchain for Index Fund Data
The partners say the blockchain technology speeds up data delivery from the index provider, removes the need for manual intervention and lowers risk.
Vanguard, the mutual fund giant, will begin using smart contract technology developed by blockchain startup Symbiont in some of its actual business processes starting early next year.
For the last few months, the companies have been testing the technology to simplify the way Vanguard takes in data from the Center for Research in Security Prices (CRSP) at the University of Chicago's Booth School of Business. This information is used to determine the composition of certain index funds managed by Vanguard, and includes things like company names, share counts, index weighting and corporate actions such as mergers or stock splits.
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The three partners found the private blockchain speeds up delivery of the data from CRSP to Vanguard, removes the need for manual intervention and lowers risk. The project will go into full production in early 2018, the companies said Tuesday.
Warren Pennington, a principal in Vanguard's Investment Management Group said in a release:
"Using this platform, investment managers will be able to instantly distribute, receive, and process index data, resulting in better benchmark tracking and significant cost savings that potentially results in better returns for our clients."
The partnership will involve 17 index funds totaling $1.15 trillion in assets, including Vanguard's largest, the $650 billion Total Stock Market Index fund. To be sure, that's just a portion of Vanguard's business; it manages 186 index products, with $3.56 trillion in assets, as part of a total 376 funds containing $4.8 trillion.
Still, it's a noticeable advance for enterprise applications of blockchain technology at a time when most of the industry spotlight has been on the boom in cryptocurrencies and token sales.
The news follows last week's decision by the Australian Securities Exchange to replace its clearing and settlement system with a distributed ledger alternative from startup Digital Asset following years of deliberations.
Vanguard image via Shutterstock
Marc Hochstein
As Deputy Editor-in-Chief for Features, Opinion, Ethics and Standards, Marc oversaw CoinDesk's long-form content, set editorial policies and acted as the ombudsman for our industry-leading newsroom. He also spearheaded our nascent coverage of prediction markets and helped compile The Node, our daily email newsletter rounding up the biggest stories in crypto. From November 2022 to June 2024 Marc was the Executive Editor of Consensus, CoinDesk's flagship annual event. He joined CoinDesk in 2017 as a managing editor and has steadily added responsibilities over the years. Marc is a veteran journalist with more than 25 years' experience, including 17 years at the trade publication American Banker, the last three as editor-in-chief, where he was responsible for some of the earliest mainstream news coverage of cryptocurrency and blockchain technology. DISCLOSURE: Marc holds BTC above CoinDesk's disclosure threshold of $1,000; marginal amounts of ETH, SOL, XMR, ZEC, MATIC and EGIRL; an Urbit planet (~fodrex-malmev); two ENS domain names (MarcHochstein.eth and MarcusHNYC.eth); and NFTs from the Oekaki (pictured), Lil Skribblers, SSRWives, and Gwar collections.
