In September, global funds network Calastone opened its office in Singapore. According to Ross Fox, Managing Director and Head of APAC, in an email interview with e27, this office will serve as a new regional headquarter for Asia Pacific –it will also reaffirm the company’s commitment to Singapore and the region.

“With 70 per cent of fund flows in Singapore already managed by Calastone’s network, we are well-positioned to enhance the city-state’s unrivalled status as a pan-Asian asset management hub,” he said.

Judging from the numbers alone, Calastone is not a new player in the field. It has worked with over 3,500 fund managers, asset servicers, and fund distributors spanning 54 countries and territories and processes over GBP250 billion (US$299 billion) monthly investment value.

In helping the industry, the company’s Distributed Market Infrastructure (DMI) combines the connectivity of its global network with technologies, such as distributed ledger technology (DLT) and cloud.

If we look at the finance industry’s future and the role of new technologies such as tokens, how exactly does tokenisation help fund managers? Most importantly, what is the prospect of Asia Pacific when it comes to this matter? How can Web3 companies embrace this new opportunity?

Barriers to token adoption

Before understanding how tokenisation can help the works of fund managers, first, we need to understand the common pain points faced by players in the fund management ecosystem. Fox lists at least four points with a lack of resources and capabilities to get better actionable insights around their clients and difficulty in freeing themselves from legacy technology as the top struggles.

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Apart from that, there is also the pressure to be more transparent and fierce competition from big tech and challenger banks. This is where Calastone steps in with their DMI to help fund managers.

“Our DMI is a next-gen infrastructure powered by the very latest technologies, including DLT and cloud. It can through the power of these technologies, enable participants to distribute and trade tokenised assets,” Fox explains.

“We are directly tokenising collectives of assets for distribution to the mass market. End-investors invest in digital tokens representing customised exposure to baskets of underlying assets managed by asset managers. Calastone’s tokenisation model meets both the demands of investors and asset managers for a product that is more personalised, cost-effective, flexible and aligned with the service levels modern customers receive from other natively digital services such as e-commerce and streaming media solutions.”

What is the most common barrier of entry for fund managers to adopt tokens? How can we eliminate this barrier? According to Fox, adoption is a key challenge for tokenised investments.

“Having the existing ecosystem is therefore key. At Calastone, for example, we’re already connected to the world’s leading financial organisations, so they can adopt new investment models such as tokenisation at a pace that suits them. Where other companies are building new products in isolation, we can use all our existing connectivity and infrastructure to enable asset managers to distribute new, token-based collective investment products globally from day one,” Fox elaborates.

“Regulatory considerations will be also key. Our model for tokenized collective investments is being developed with these considerations in mind, and we are bullish on the prospects of regulators around the world being open to it.”

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Why Asia Pacific is the future

When it comes to its readiness to embrace tokenisation, how does the Asia Pacific market fare?

According to Fox, the potential application of tokenisation in asset management has come a long way in the region. Aside from funds, the enterprise adoption of DLT has continued to progress. He gave examples of companies such as Unilever, and SAP that are teaming up to explore adoption of tokenisation in supply chains or Industrial and Commercial Bank of China (ICBC)’s 40 blockchain applications.

This provides exciting progress, especially since the regulator aspect is also catching up in the Asia Pacific.

Fox also shares how fund managers in the region differs from the rest.

“Modern investors want more personalised, low-cost investing, and desire access to bigger pools of assets, with a user experience that could parallel the lifestyle apps that we are familiar with. An optimised, modern user experience looks like this – instant purchases, ability to invest in real-time, access to fair prices and a broad range of investment assets tailored to their objectives and circumstances,” he says.

Calastone is currently working with several major global asset managers in building its tokenisation model, and it is currently being presented to regulators.

“In 2023, we expect the first stages of this new model becoming a reality as our work with asset managers crystalises. As the model evolves further and regulatory frameworks are established, the opportunities will grow exponentially, as accessibility increases,” Fox closes.

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Image Credit: Calastone

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