Run $100 Trillion Fund Trade on Private Blockchains

Revealed exclusively to CoinDesk, FundAdminChain (FAC), which is helmed by McNulty, also boasts R3 CEO David Rutter as an advisor, as well as buy-side veterans Pete Townsend and Mark Harrison, both formerly of BNP Paribas

Brian McNulty, a former R3 managing director who left the company in January, has emerged from the bushes with a blockchain project to streamline the fund management industry.

Built on R3’s Corda platform, FAC aims to bring the distributors, transfer agents, custodians and other intermediaries involved in the buying and selling of units in a fund onto a distributed ledger. The blockchain is targeting transfer agencies and messaging, to begin with, and then aims to build out into asset services.

The size of this industry is about $100 trillion globally, according to FAC’s pitch deck; the London-based firm is starting with the comparatively modest goal of capturing 1.5 percent of the U.K. market’s $8.5 trillion in assets under management (AUM) in Year One.

A distributed ledger aimed at the funds space had been on McNulty’s mind for some time, he said, and he honed the idea during his time as global head of services at R3. As such, he’s in no doubt about the choice of platform.

McNulty told CoinDesk:

“R3 is keen to fuel companies like us and we couldn’t do this without them. You could say I’ve drunk the Kool-Aid, but to be honest I’d only do this on Corda. It’s the only one that’s fit for purpose. And having been in there for three years, I can see how we can work with some of the other builders of solutions.”

Millions in savings

The potential savings from the technology are “exciting”, according to McNulty. FAC will charge fund managers 0.5 basis points for the registry, depository and transaction functions, compared to 5 basis points on average incumbents charge for the same services, he said.

Using FAC can save fund managers a minimum £30 million per year, per each jurisdiction where a fund is domiciled, for every £100 billion assets under management, McNulty claimed.

The minimum viable product is out the gates, McNulty said with 25 fund managers looking at it. He said FAC is expecting to do a raise at the tail end of this year and live production is slated for June 2020. 

McNulty joined R3 in March 2016 having previously founded the PTDL (Post Trade Distributed Ledger) Group, a blockchain consortium which numbered around 40 members including CME Group, State Street and the London Stock Exchange.

He left R3 as part of an internal reorganization there, but it appears there are no hard feelings.

FAC will be built using the full commercial version of Corda as opposed to being an open-source “CorDapp.” As such, the Corda licensing will be wrapped in the license for FAC, said McNulty, adding:

“Most things that are going to go into production in banks probably need the enterprise Corda. So I am building on an enterprise version from the outset because I know that’s where we’ll end up.”

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