| NEW YORK
NEW YORK Feb 22 Northern Trust Corp
has deployed a new blockchain-based system built with
International Business Machines Corp to record
information on transactions involving private equity funds, in
one of the first commercial deployments of the nascent
The program is currently being used to manage the
administration of a private equity fund run by Switzerland-based
asset manager Unigestion, Northern Trust and IBM said on
The new blockchain system records documents and information
connected to transactions involving the fund, such as
investments by limited partners, a process which is currently
highly manual. Other than providing a central record for fund
managers, investors and administrators, the program also allows
regulators to access the information when required.
Blockchain, which first emerged as the system underpinning
cryptocurrency bitcoin, is an immutable shared ledger of
transactions that is maintained by a network of computers,
rather than a centralized authority. As it creates a shared
golden source of data it can reduce errors and the need for
Financial institutions have been ramping up their investment
in blockchain, also known as distributed ledger technology, in
the hopes that it can help make some of their processes more
efficient and cheaper to manage.
The new system, built using blockchain code from the Linux
Foundation-led Hyperledger project, could provide greater
transparency, efficiency and security to an asset class that has
remained largely paper-based, Northern Trust and IBM executives
"We decided to focus on the private equity market because
the marketplace is very manual today," said Peter Cherecwich,
president of corporate and institutional services, at Northern
Trust. "Benefits should include a reduction in cost."
The Chicago-based asset management and fund administration
company plans to roll out the platform to other clients
selectively, it said.
While financial firms have announced numerous blockchain
experiments over the past year, the vast majority still have to
move into real implementations, leading skeptics to question
whether the technology's potential has been over-hyped.
Private equity was an ideal market for early blockchain
adoption because it involved lower volumes of transactions than
other asset classes but would benefit from more automation,
Northern Trust and IBM executives said.
(Reporting by Anna Irrera; Editing by Cynthia Osterman)