Vanguard is launching a new platform that uses blockchain technology to simplify the process of sharing data with index providers. The platform, which it expects to introduce early next year, has the potential to reduce errors and increase cost savings and returns for investors, according to spokeswoman Carolyn Wegemann.
Under the current system, Vanguard constantly receives updated files from index providers about corporate actions throughout the day, which are then manually processed. The data transmission usually involves multiple parties and distribution channels. The new platform will allow index data to move instantly between index providers and market participants through one decentralized database.
“Using this platform, investment managers will be able to instantly distribute, receive and process index data, resulting in better benchmark tracking and significant cost savings that potentially results in better returns for our clients,” said Warren Pennington, a principal in Vanguard’s Investment Management Group, in a statement.