FactSet Pairs its OEMS with CG Blockchain's Distributed Ledger

FactSet and distributed-ledger technology (DLT) provider CG Blockchain have entered into a partnership that will allow users of FactSet’s order and execution management system (OEMS) to access CG Blockchain’s products through the latter’s app store, BCT Fundstore.

Additionally, CG Blockchain’s current and future users will also be able to use FactSet’s OEMS—which became part of the FactSet stable as a result of its 2015 acquisition of Portware—as FactSet is the exclusive OEMS partner for the DLT provider, says John Adam, FactSet’s global head of portfolio management and trading solutions.

While the service is not immediately available to clients, Adam anticipates it going live soon.

“CG Blockchain is fully live; FactSet OEMS is fully live. We are in process and have already started writing the interface between the two,” Adam says. “We would expect to have our first clients using the full suite of solutions probably in the next couple of months.

This partnership effectively integrates blockchain technology with an OEMS, which will allow for a real-time, immutable recording of transactions to CG Blockchain’s distributed ledger, ComplianceGuard. Adam says that compliance and auditable events will be locked into the ledger, thus providing greater transparency and security for investors.

“It’s an unfortunate reality that in the past there has been some level of fraud or deception among certain investors and that causes the plan sponsors and the end-investor to have concerns over. Are you managing my money the way you say you are; are there proper controls and compliance in place?” Adam says. “The value of doing this on a blockchain is that it’s a distributed ledger and it’s unalterable. The purpose of that technology is designed so that it cannot be tampered with. If that transaction is sitting in a database or a file log, I could potentially change it. So having that be external from the fund, and having an unalterable and tamper-proof record of that transaction—and that  transaction is within the compliance rules, both for the fund construction and also the actual regulations, whether that’s Mifid II or 40 Act—certainly provides piece-of-mind for the end-investor.”

Adam says that currently, FactSet captures these events and stores them in a data warehouse for the fund’s internal use only, but then moving that information around—which is highly sensitive—can become an issue.

“So the information is there, but it’s never been available in this way, and that’s what’s so truly disruptive about this,” he says. “It’s moving from something that was periodic and manual, to online and real time.”