Investment company Vanguard plans to utilize index-based pricing blockchain

Investment company Vanguard plans to utilize index-based pricing blockchain

This week the investment company Vanguard Group (from 4.8 trillion dollars of assets under management) announced its collaboration with the Symbiont and CRSP for the joint use of the index data.

If successful, the pilot project in early 2018, will be implemented system updates the index and vnutrikletochnykh data of the Centre for research in securities prices (CRSP) via the blockchain private network.

Vanguard Group, under which there are nearly 5 trillion dollars in assets, is the recognized gold standard for low-cost passive investment strategies. This week, the financial giant announced its collaboration with the Symbiont and the Center for research in securities prices (CRSP) “to simplify the process of sharing index data through innovative blockchain technology.”

At the moment, Vanguard manages 17 funds based on CRSP indices, including Total Stock Market Index Fund (VTSMX) funds 650 billion, according to Reuters. Over the past few months CRSP (organization for the development of statistical exchange reports School of business. Booth at the University of Chicago) aired daily Vanguard index data via the blockchain platform Symbiont in the “test environment”.

“Data transfer through the blockchain and automating workflow with smart contracts promote transmission of urgent data, eliminating the need for manual updates and reducing the risks”, – stated in the press release of Vanguard.

Warren Pennington, Director and global head of the division of financial and technological strategies of the investment management Vanguard, said:

“With this platform, investment managers can instantly distribute, receive and process the index data that will allow you to track targets and significant cost savings. And it has the potential to deliver higher returns to our clients.”

David Barclay, chief Executive officer, CRSP, stressed the importance of rapid and accurate transmission of price data: “Safe, timely and reliable dissemination of confidential information that are critical in time, is crucial for the continuous development environment of investment and financial services.”

The Vanguard Group, founded by Jack Bohlen in 1974, is known for the introduction of low-cost index funds. As of October 2017, the company operated about $ 5 trillion of global assets. For comparison, at the time of writing, the whole cryptocurrency market is estimated at 492 billion, 10 times less volume from the Vanguard. Despite its size, Vanguard is keeping pace with progress in the field of financial technologies.

The bill of the Senate of the state of Delaware No. 69, enacted by Governor John Carney in July 2017, is associated with the development of index pricing data on the basis of the blockchain. Regulatory document paved the way for “distributed registry”, the development of which will have a significant impact on the investment management.

Professionals in the financial industry should explore a possible change in their profession through the blockchain. As investors focus on the strategies of passive investment, the distribution based on the blockchain can completely change the role of management investment companies.

Also, be aware that the blockchain strategy Vanguard does not equate to supporting cryptocurrencies.

In fact, at the end of last month, at an event organized by the Council on foreign relations, Bogle spoke sharply about bitcoin. Answering questions from the audience, he said: “avoid bitcoin like the plague. I hope I made myself clear?”

“Bitcoin has no underlying rate of return,” he explained. “Bonds are the coupons for the shares, income and dividends, for gold there is nothing. There is nothing that could support bitcoin, but faith in what you can sell it to someone at a higher price”.

“Bitcoin could rise to $ 20,000, but this is not proof that I’m wrong – said Bogle. Talk when it will cost 100 dollars.”

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