SGSS extends its services to the distribution of Blockchain funds (DLT)
Societe Generale Securities Services (SGSS), a major player in fund distribution, is always ready to listen to its institutional investors and asset manager clients and is participating with them in development initiatives using Distributed Ledger Technology (DLT). For example, a hybrid, innovative and evolutionary model, has been set up between IZNES and SGSS to offer SGSS clients simplified fund distribution channels.
How can we meet the new needs of our institutional clients and management companies?
In order to simplify and streamline the fund distribution market, IZNES, in collaboration with SGSS, proposed as early as 2017 a model based on blockchain technology for the management of subscriptions/redemptions on collective investment schemes. This is a pan-European platform that complements other distribution channels, offering SGSS clients real-time transparency on the flows and positions recorded in the shared register.
The IZNES model is based on a private and secure technology that connects investors and asset management companies directly. This initiative has been followed by major players, including Societe Generale clients such as management companies Eurazeo, OFI Invest Asset Management and SG29 Haussmann, as well as major investors such as insurer Generali.
Domiciled in France since its creation, IZNES has obtained investment firm status and has been regulated by the AMF and the ACPR since 2020. It is also pursuing its development in Europe by being registered in Luxembourg and Ireland.
Drawing on this success, the IZNES platform currently lists around 200 UCITS and FIA funds, with assets under register of €8.5 billion1. This figure is constantly growing and IZNES is continuing its expansion as a marketplace by accelerating its development in private equity real estate.
The interoperability established between SGSS and IZNES allows their common clients to benefit easily from the services offered by IZNES and SGSS.
Progress resulting from blockchain
SGSS’ objective is to increase the market’s operational efficiency in terms of fund distribution.
IZNES has therefore sought to reduce the number or role of intermediaries required to process flows in order to achieve reductions in costs and transaction times. More particularly, blockchain has been used to optimise the registration of ownership of mutual fund shares or units by leveraging distributed ledger technology (DLT) to ensure the integrity and traceability of transactions. The management of client data has also been simplified, notably by allowing the sharing of a single KYC for a given investor between management companies.
For mutual funds distributed through the blockchain, our asset manager clients can now benefit from transparency on holders in the distributed register, allowing real-time monitoring of flows and stocks. This facilitates liability management and knowledge, which is crucial for risk control, financial monitoring and reporting. Trailer fee management is also simplified, as it is natively reconciled and fully automated within the blockchain.
The contribution of SGSS expertise to Blockchain innovation
The collaboration between IZNES and SGSS is based on a hybrid centralisation model, based on dual collection linked to two possible distribution chains.
To place their subscription or redemption orders for collective investment schemes, investors can choose between two distribution channels involving two centralisers: IZNES, by delegation from the management company, for subscriptions in blockchain register mode and SGSS for orders in the CSD Euroclear France model.
SGSS then plays the role of final aggregator to cumulate all the orders to be transmitted to the portfolio management company as well as to the stakeholders, such as the valuation services providers and the Trustee & depositary services providers.
This innovative hybrid model set up between IZNES and SGSS is intended to be scalable in order to meet the expectations of SGSS' clients, investors and asset managers.
In addition to its collaboration with IZNES, SGSS is actively participating in the various market initiatives, in particular the Pilot Regime, which aims to modernise the settlement and delivery infrastructure for tokenised and blockchain securities.
In doing so, Societe Generale group, through SGSS and its subsidiary Forge, is determined to be a key player in the development of crypto-asset and blockchain uses.
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Morgane Séveno, Product Manager Fund Distribution France & Trustee, SGSS