LONDON, Thursday 20 April 2023 – The International Securities Lending Association (ISLA) today released a Digital Assets in Technology paper entitled ‘Commercial Opportunities & Practical Considerations for Tokenisation for the Securities Financing Market‘, as part of the Asset by Asset series of content. The paper can be downloaded here.
This paper takes a deep dive into tokenisation from the perspective of securities financing markets, and how tokenising assets can open up multiple opportunities for the industry, especially in respect of the collateralised leg of the trade.
It provides insight into key considerations such as increased mobility of trapped assets and accessibility to investors for illiquid assets, the ability to optimise asset utility across fragmented asset pools, reduced operational processing timeframes, reduction of delivery risk through a combination of tokens with smart contracts, improved supply chain transparency including Environmental, Social & Governance (ESG) markers, and the transfer of contractual rights of a transaction separately to the assets themselves.
Using tokenisation as a way of ‘securitising’ certain fund structures is another use case explored in the paper.
“The tokenisation paper highlights key areas of conversation around tokenisation using Distributed Ledger Technology (DLTs) that have an impact on securities financing.” said David Shone (Director – Digital Affairs, ISLA). “Education, awareness, and a forum to discuss risks and opportunities of new technology is core to what ISLA offers its members through our digital workstreams, and this paper will hopefully encourage further exploration within our Digital Asset Working Groups (DAWG).”
ISLA extends appreciation and thanks to all of the members of the DAWG who actively contributed time, content, commentary and advice in the authorship of this paper. The Digital Asset Technology: Asset by Asset series is produced in conjunction with members of the DAWG, which was established by member request in May 2022, to discuss all topics associated with expansion into new digital asset classes.