LaSalle Portfolio Management has partnered with a blockchain-based fund solution provider Real blocks. With $77 billion in funds under administration, LaSalle is the asset management arm of real estate firm Jones Lang LaSalle.
RealBlocks offers a white label solution to asset managers and fund distributors in the field of alternative investment. Its offering is an end-to-end solution starting with investor onboarding and ending with all aspects of secondary market trading and transfer. Only parts of its solution use blockchain. We spoke with CEO Perrin Quarshie to find out more.
In this particular case, LaSalle is not yet adopting the secondary market solution. Instead, it uses investor integration, KYC and AML, and electronic document signing. LaSalle was initially interested in RealBlocks for retail investors, but ended up using it for institutions as well. He also rolled it out for a global employee co-investment program.
“RealBlocks is a game-changer in real estate and alternatives due to its ability to provide a holistic strategy that addresses the entire lifecycle of the investor onboarding process,” said Jodi Akers, Managing Director of the room.
Quarshie told Ledger Insights that he aims to create a digital experience to enable asset managers to expand distribution, especially internationally and provide investors with a better experience, including greater liquidity. .
The advantage of using blockchain for secondary trading is the near-instantaneous transactions made possible by the use of digital securities while providing a single securities record for the fund administrator, transfer agent and custodian. .
Under the hood of RealBlocks
We were curious about which aspects of RealBlocks use blockchain and which do not. It starts with the integration of the front-end client, which does not use the blockchain. This helps filter investments based on suitability for the client.
“When they complete the purchase through our system, we issue a digital security that we store in a safe,” Quarshie said. “When the investor wants to trade the security, we transfer it from User A to User B, and User B can be a secondary trading platform or another individual.”
“And then we send that back to the traditional transfer agent. So RealBlocks is kind of a parallel system where we have the on-chain functions of the digital securities and make them tradable. And then we have the off-chain functions of custody, d fund administration and transfer agency in a digital format.
Custody is hybrid as you have the digital representation of on-chain security, where RealBlocks takes care of private key custody. Then there is the conventional off-chain custodian, such as Schwab or BNY Mellon, which handles asset safekeeping and IRS reporting.
Today, RealBlocks essentially duplicates the functionality of the blockchain and conventional worlds for compliance and enabling integration with traditional institutions. But Quarshie has been quite direct in his desire to phase out the conventional part of this parallel system as the regulatory environment permits.
Another common issue with blockchain security tokens is that there are many platforms, creating silos and the need for interoperability. This is a topic that RealBlocks plans to address by participating in discussions about creating standards.
On the technology side, the RealBlocks solution currently uses the Ethereum public blockchain, although it can use other blockchains, whether public or private.
In Europe, several organizations use blockchain for fund distribution, including Allfunds, Calastone, FundsDLT, Iznes, and FundsAdminChain.