NEW YORK (Reuters) - Exchange group Nasdaq Inc and Nordic financial services group SEB have teamed up to test a blockchain-based mutual fund trading platform for the Swedish market in an effort to simplify and make the process faster.

FILE PHOTO: A view of the exterior of the Nasdaq market site in the Manhattan borough of New York City, U.S., October 24, 2016. REUTERS/Shannon Stapleton/File Photo

The platform would enable fund companies, distributors and other market participants to record all transactions and changes to mutual trades in real time on a shared digital ledger, Nasdaq and SEB said on Wednesday.

Unlike the equities markets where trades are recorded by a central securities depository, the Swedish fund market does not have a central entity responsible for recording fund holdings.

This makes tracking purchases and sales of fund units a complex administrative process involving various parties. Currently it is mainly handled through a mix of different technologies and is in part still paper-based.

Blockchain, which first emerged as the system underpinning cryptocurrency bitcoin, is a shared ledger of transactions that is maintained by a network of computers on the internet rather than a central authority. Financial institutions have been ramping up their investments in the nascent technology in hopes that it can help reduce the complexity and cost of some of their burdensome back office processes.

“This is a perfect use case for the blockchain,” Magnus Haglind, senior vice president and head of product management, market technology at Nasdaq said in an interview. “It is not about disrupting the industry, it is focused on bringing efficiencies.”

Nasdaq, one of the world’s largest providers of technology for exchanges, has been one of the earliest and most vocal supporters of blockchain in the financial industry. It already uses it to power its market for shares of private companies and is testing a system to run proxy voting on the Tallin Stock Exchange.

Nasdaq and SEB have committed to continue development on their joint effort with the aim of building and testing a working prototype, they said in a joint statement.

“With the help of a blockchain we can create a faster, simpler, more effective and reliable fund market,” Göran Fors, acting head of Investor Services at SEB, said in a statement.

While financial institutions continue to test and invest the technology, critics have warned that its potential may be over-hyped, suggesting that it may take years before it can be implemented at scale.