UK's FCA endorses Investment Association's fund tokenisation model
The report says fund tokenisation will make the financial industry more efficient by reducing administration costs and allowing quicker settlements
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On November 24, the United Kingdom’s Financial Conduct Authority (FCA) welcomed a blueprint model developed by the Investment Association (IA) to facilitate the tokenisation of funds for asset management firms.
The Investment Association (IA) is a UK trade body representing Investment Managers and Investment Management Firms. It represents over 250 corporate members, who collectively manage over £7.7 trillion for their clients in the UK and worldwide.
The FCA’s endorsement of the IA’s Fund Tokenisation blueprint indicates regulatory support for UK investment managers to use blockchain technology for fund tokenisation. This move marks a departure from traditional record-keeping systems and opens doors for embracing innovative approaches within the industry.
The report suggests that fund tokenisation, which involves issuing tokenized units or shares using distributed ledger technology (DLT), will make the financial industry more efficient and transparent. Not only will it reduce administration costs, but it will also allow quicker settlements.
The blueprint recommends a staged approach to fund tokenisation, starting with a basic model that can be implemented within the current legislative and regulatory framework. Subsequent stages of the blueprint may necessitate legislative or regulatory changes.
