The Financial Conduct Authority (FCA) has unveiled its plans to support tokenisation as a way to drive innovation and growth in asset management.
Tokenisation refers to digital representations of assets on distributed ledger technology, such as the Blockchain.
The FCA said on Tuesday that it views the practice as a way to help asset managers to innovate, drive competition, increase choice for consumers and open up new ways to distribute funds.
It claimed tokenisation has the potential to offer much broader access to private markets and investments, in line with the government’s drive to encourage more consumers to participate in financial investments.
There is also hope that it could offer improved efficiencies and reduced costs for fund management. One such way could be lowering the costs of sharing and reconciling data between firms operating or distributing a fund.
“Tokenisation has the potential to drive fundamental changes in asset management, with benefits for the industry and consumers,” said Simon Walls, executive director of markets at the FCA.
“There are many things that firms can do under our existing rules and more that become possible with the changes we propose enacting now. We stand ready to design the next stage with the industry – this publication suggests a path.
“The UK has the opportunity to be a world-leader here and we want to provide asset managers with the clarity and confidence they need to deliver.”
The FCA has proposed guidance on operating tokenised fund registers, a streamlined alternative dealing model for fund managers to process buying and selling of units in authorised funds and a roadmap for fund tokenisation.
