FIA strongly supports the UK authorities’ vision that tokenisation can deliver material improvements in efficiency, resilience and functionality, particularly in post-trade processes. FIA believes tokenisation represents a critical opportunity to modernise collateral and liquidity management, settlement infrastructure and risk management frameworks, rather than fundamentally redesign market structure.
In its response, which focuses on the use of tokenisation in cleared derivatives markets, FIA highlights six key messages:
- Tokenisation should be prioritised in collateral and post-trade processes, where benefits are most immediate and material.
- Regulatory treatment should remain technology-neutral and based on functional equivalence and risk outcomes.
- Legal certainty and enforceability of tokenised assets are the most critical enablers of adoption.
- Existing regulatory frameworks, including the Settlement Finality Regulations (SFRs), UK European Market Infrastructure Regulation (UK EMIR) and Financial Collateral Arrangements Regulations (FCARs), should be leveraged to support the adoption of tokenisation within the existing regime rather than creating a parallel one.
- Tokenised assets should be permitted as collateral where they meet existing central counterparty (CCP) eligibility and risk management standards.
- Adoption should be phased, standards-based and closely coordinated with regulators, financial market infrastructures, clearing members, custodians and technology providers across the cleared derivatives market ecosystem.
Read the full response here.
