Impact analysis electronic fund units/crypto fund units​

Tier 1 asset manager​

Initial situation

  • The client wants to examine the impact on existing processes and systems in the context of the transition to electronic fund units and crypto fund units for the current subscription and redemption process
  • The aim is to investigate the potential of distributed ledger technology in the subscriptions and redemption process (e.g., automation through smart contracts and reduction of settlement times)
  • A multi-level target operating model between asset manager/management company, depository, and investor is to be developed
  • The goal is to determine the cost savings in the subscriptions and redemption process by eliminating the global certificate via CSD
  • The impact of the interaction between tokenized crypto fund units and digital assets is to be analysed

Approach

  • Training of more than 50 employees on the basics of blockchain technology using workshop concepts developed together with the Frankfurt School Blockchain Center
  • Identification of and interviews with the affected departments, starting with the issuance of a fund in the conventional process as well as along the entire process chain of the investment process
  • Derivation of possible functional and process-related adaptation requirements and affected systems (e.g., liquidity management and commission processing)
  • Analysis of the impact on existing systems, also in interaction with third parties (e.g., crypto trading venues, crypto custodians, depository)
  • Effort estimation for implementation of the use case, as well as the derivation of a recommendation for action

Results

  • Development of the as-is process subscriptions and redemption process, including relevant systems and time dependencies
  • Development of the target subscriptions and redemption process (target operating model), including step-by-step implementation options for a DLT-based register
  • Volume-dependent, significant savings potential through conversion to electronic fund units/crypt fund units.
  • Analysis of possible automation of middle and back-office processes through smart contracts (e.g., calculation of withholding taxes and commissions)
  • Analysis of the system-side impact of digital assets within tokenized crypto fund units