The movement to tokenize assets, including digital securities, is gaining traction around the world. Most keenly in global financial centers. Today, OKX and ICE (parent company of the NYSE) have announced the creation of a Tokenized Securities Venue (TSV), which will aim to facilitate 24/7 trading of listed securities – first up, a list of the best-known and most liquid equities in the world.
Last week, Lloyds Bank published research on the tokenization of assets explaining that tokenization may create a faster, more efficient financial system, freeing up capital and liquidity.
The research cited data indicating that 71% of the UK’s largest financial institutions expect tokenization to reshape financial services. The survey included 100 senior decision-makers across the UK’s largest banks, insurers, financial sponsors, and asset and wealth managers.
Tokenized assets may include cash, bonds and funds, which can be transferred more efficiently.
The surveyed group sees tokenization as a growth priority.
Tokenovate founder and CEO Richard Baker says tokenization has moved from discussion to reality.
“Faster settlement and better collateral mobility are increasingly important because they have a direct impact on how much liquidity firms need to hold, how quickly they can redeploy capital and how much operational risk sits between trade execution and final settlement. Institutions that treat tokenization as an asset-format project alone will struggle to capture those benefits. Cash, securities, collateral and the contractual events around them need to move in a coordinated way, with settlement instructions and lifecycle events automated rather than passed between disconnected systems and teams. As more activity moves onto digital infrastructure, common standards and interoperability will become critical to keeping those workflows consistent across custodians, legacy platforms and new networks. This is how tokenization can translate into faster settlement, lower operational friction and more productive use of liquidity across the market.”
Marius Jurgilas, CEO of Axiology, believes tokenization will measurably affect how capital is deployed and the efficiency of capital markets. At the same time, he notes that Europe remains fragmented, limiting issuers’ ability to reach investors across borders and constraining capital flows.
“Regulated tokenized securities can support a more connected market structure by bringing issuance, distribution, trading and settlement onto infrastructure that works across jurisdictions. For smaller companies and public bodies, this can broaden the investor base and create more diverse funding channels, while giving investors greater access to opportunities beyond their domestic markets. More efficient movement of capital across borders is where tokenization can make a meaningful contribution to European capital formation.”
Industry insiders typically view tokenization as inevitable, a natural evolution of the markets. By automating transactions and management, tokenization can deliver significant efficiencies for both institutions and individuals. While tokenization has been a top thesis for the markets for years, change in the highly regulated financial services sector has slowed adoption of the technology. As the US has recently shifted from obstruction to embracing tokenization, the technology will accelerate. Global financial centers like the UK, as well as other developed markets, stand to benefit greatly.