Fund tokenisation report looks at further token use in MMFs

The second report of the Technology Working Group on fund tokenisation looks at the potential use of tokens as collateral for money market funds, and how tokenised funds can plan a key role in an “on chain” investment market that will streamline back-office functionality.

The group now plans that firms will test, probably using sandboxes:

  • tokenised funds investing in tokenised securities (such as in fixed income or other asset classes) to achieve a fully “on-chain” market; and
  • using tokenised MMF units as collateral where this is permitted for non-centrally cleared derivatives contracts.

The report then looks forward to future developments, such as:

  • on-chain fund settlement via digital money;
  • enabling funds to hold tokenised assets in their portfolio; and
  • expanding the scope of solutions to include the use of public permissioned networks.

The group works closely with regulators and industry associations, and will next turn to AI, while the Investment Association will continue its work on tokenisation, and will focus on implementation.

Emma Radmore