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Collateral Management Winner for Tokenisation Use Cases in UK Survey

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Collateral management was the winning use case cited by respondents to the UK’s Financial Conduct Authority (FCA) and Bank of England call for input survey, titled “The future of tokenisation: A joint vision from the authorities for UK wholesale financial markets.”

With the survey garnering 123 responses, the results report notes that “Collateral was by far the most frequently mentioned use case. Respondents wanted further clarity on the eligibility of tokenized collateral to promote collateral mobility.”

Improving how collateral moves could transform wholesale operations by:

  • Reducing liquidity buffers that firms must hold against trades.
  • Enabling real-time margin calculations to manage risk more dynamically.
  • Allowing direct posting of tokenised money-market funds as collateral without converting them to cash first.

Says Steve Vinnicombe, Head of MACH Technology at consulting firm Delta Capita: “The industry is clearly moving beyond tokenisation for tokenisation’s sake. Collateral is where the commercial case becomes tangible, because making assets easier to mobilise can reduce friction and free up capital. The next step is permanent market infrastructure that can bridge old and new, communicating across SWIFT, APIs and blockchain networks as opposed to forcing firms to choose between them. It is this level of interoperability that will be critical if tokenisation is to move from pilots into everyday wholesale markets.”

Also mentioned frequently, mainly by buy-side firms, was the use of Tokenised Money Market Funds.

While respondents broadly support the UK’s current regulatory direction, market participants are calling for faster progress, concrete implementation dates, and clearer rules regarding custody, settlement and prudential treatment.

Moving forward, the regulators will assess whether tokenised assets, including stablecoins, can qualify as eligible collateral within the BofE’s Sterling Monetary Framework operations.

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