The net settlement solution provides a matching engine, allowing buyers and sellers to match trades, before they settle in a single net movement.
Designed specifically for the funds industry, the solution automates reconciliation and settlement processes for investment funds, and intends to improve efficiency and liquidity position.
Calastone has estimated that about 52 percent of trades are, in effect, settling unnecessarily. This equated to approximately £158 billion in 2015 alone.
The settlement solution also means counterparties can know their liquidity positions before the trade actually takes place.
Jon Willis, chief commercial officer at Calastone, pointed out that the solution can only be fully effective as a community, or network, including both distributors and fund managers.
When the solution launched last year, he said, it saw some momentum. However it required a participant with a large transaction volume in order to make the solution sustainable.
Willis said: “Hargreaves is really important for us because it gives the level of volume to bring the product out of the ‘beta’ stage and in to a full-blown support system, where it can actually start helping to drive economy.”
“That support is driving a second wave of fund managers to sign up, and that in turn will make it more attractive to more distributors. It's a swing effect.”
Danny Cox, head of communications at Hargreaves Lansdown, said: “Automatic matching of trades and the netting of settlement positions early in the day will improve the efficiency of our operational and treasury teams. Given the number of transactions that Hargreaves Lansdown processes this is of huge benefit.”
Willis added: “Conceptually, the community understood that there was a problem in the marketplace that could be solved, both from an operational efficiency and a liquidity risk aspect. But, certainly having endorsement from an institution like Hargreaves, considering a reputational and a scale standpoint, is hugely beneficial.”
“The more people that adopt the solution, the greater the efficiency for the industry as a whole.”