UK banks are clamouring for a national platform for tokenised securities

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By Matthew Griffin Connected Society 23rd July 2023

WHY THIS MATTERS IN BRIEF

Tokenisation is an odd technology, but it will open the door to new asset classes and markets worth over $100 Trillion.

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This week UK Finance, the banking and financial services industry body, called for government action to support the UK in adopting tokenized securities. Currently the UK is behind other countries regarding tokenization, but together with Oliver Wyman it published a report outlining a path for the UK to become a leader.

“Securities tokenisation is likely to transform financial markets, through delivering lower costs, lower risks, and wider market access,” said Bob Wigley, Chair of UK Finance. “But without continued bold action the UK risks falling behind other jurisdictions.”

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The industry body called for the government to issue bonds using blockchain, following the likes of the Hong Kong Monetary Authority, and the European Investment Bank (EIB), which has issued four digital bonds.

Additionally, there’s a request for the Treasury to explore whether there’s “industry appetite for a shared, national infrastructure for tokenized securities.”

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While the EU’s DLT Pilot Regime is now live, the UK’s FMI Sandbox is not yet out of the starting gates. UK Finance asked His Majesty’s Treasury (HMT) to roll out the sandbox urgently as the number one priority. It’s keen for a roadmap for what happens when the sandbox ends, as there’s a risk that the efforts could be wasted. It also wants to see connectivity between other jurisdictions and the UK Sandbox.

UK Finance has called for flexibility regarding the Central Securities Depository Regulation (CSDR). The EU’s DLT Pilot Regime relaxes legislation allowing a single entity to operate both a trading platform and a central securities depository (CSD). That’s because a distributed ledger often covers most of a CSD’s functions in recording asset ownership and settlement.

However, despite the EU rolling out its Pilot Regime, three months after the legislation went live, there’s been little activity. One of the challenges is the limits on transaction volumes for digital securities, which resulted in the bigger players choosing to comply with existing legislation instead.

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“The opportunities that tokenisation presents are substantial and given the UK is a leading global financial centre, we need to be at the forefront of development,” added Wigley.

Matthew Griffin / About Author

Described by NASA as a "Walking Encyclopaedia of the Future" and one of the world’s most in demand keynote speakers Matthew Griffin, Founder and Futurist in Chief of the 311 Institute, a global Futures and Deep Futures advisory firm, is a multi-award winning Futurist and strategic foresight expert, author, lecturer, mentor, podcast and YouTube host.

With a distinguished career running global business units at Atos, EMC, and IBM today Matthew helps leaders and titans of industry from all over the world explore the impact of the inter sections of technology, culture, and leadership, then helps them create high performance organisations that can continuously disrupt, outpace, and outthink their competition.

15 times author of the hit series the Codex of the Future series Matthew's ability to identify, track, and explain the impacts of hundreds of emerging technologies and trends on global business, culture, and society has earned him a powerful reputation and a roster of clients that include royal households, world leaders across the G7, G20, and G77, and many of the world's most recognised and exceptional organisations including ABB, Accenture, ABN Amro, Adidas, AON, ARM, BCG, Centrica, Citi Group, Coca Cola, Deloitte, Dentons, Disney, Dow, EY, Google, KPMG, Lego, Microsoft, Legal & General, LinkedIn, Nokia, Paramount, PepsiCo, PWC, Qualcomm, RWE, Samsung, T-Mobile, UBS, Visa, WIRED, WPP and hundreds of others.

Matthew is regularly featured in the global media including the AP, BBC, Bloomberg, CNBC, Discovery, Forbes, Khaleej Times, Telegraph, TIME, ViacomCBS, WIRED, and the WSJ, and his mission is to help organisations create a fair and sustainable future whose benefits are shared by everyone irrespective of their ability, background, or circumstances.