UK FCA Sets Out Rules for Fund Tokenisation Innovation
UK Financial Conduct Authority (FCA) has set out guidance to support innovation in fund tokenisation, the regulator said in a statement on Thursday.
FCA said asset managers will find it easier to unlock the benefits of fund tokenisation following the FCA’s new guidance. The official said the guidance sets out how firms can use distributed ledger technology (DLT) within the regulator’s existing rules.
New rules will also make fund dealing more efficient, including an optional Direct to Fund (D2F) model. This enables investors to deal directly with the fund, whether traditional or tokenised.
FCA said tokenisation is a way of representing an asset, or ownership of an asset, using distributed ledger technology. Tokenisation has the potential to lower costs and open up investment opportunities to a wider audience.
The FCA has worked closely with industry to develop this guidance and rules to support innovation and improve efficiency for asset managers.
Commenting on the development, Simon Walls, executive director of markets at the FCA said: ‘Tokenisation has the potential to play an important role in asset management, and its adoption will be driven by firms and investors.
“We have focused on delivering what the market has asked for: a clear, practical framework that provides confidence in how fund tokenisation can operate within our rules, both now and into the future.’
John Allan, director, innovation and operations unit and director, Engine at the Investment Association, said:
‘This milestone represents a meaningful advance in the UK’s approach to innovating funds market infrastructure. Working in collaboration with the investment management industry, the FCA has produced detailed guidance that provides confidence in public chain models where the right controls are in place and in the use of digital cash tools for operational needs.
“Alongside wider work on wholesale digital market infrastructure, this guidance and the increased optionality provided by D2F give firms a stronger foundation to align innovation ambitions with long-term operating choices.’
The UK is a leading asset management hub, with around 2,600 firms managing £16.5 trillion of assets for UK and global clients. Supporting growth and innovation in the sector is a core part of the FCA’s strategy. U.S. War in Iran Cost $25bn so Far, Says Pentagon Official
