The Financial Conduct Authority and the Bank of England have launched a joint consultation on tokenized UK wholesale markets. The consultation seeks feedback on tokenized securities, collateral, settlement tools, and market infrastructure rules. The goal is to gather market input before establishing a digital wholesale roadmap. The consultation also covers aligning stablecoins and tokenized deposits with payment regulations. Feedback is requested from banks, investment firms, asset managers, trading venues, post-trade firms, and fintech companies to provide views on market rules and infrastructure. The consultation emphasizes tokenized securities, including bonds, equities, and fund units, as regulators aim to provide more certainty on prudential treatment, tokenized collateral, and settlement instruments as adoption increases. The review is complemented by the Digital Securities Sandbox, where the FCA and Bank of England are collaborating with 16 firms on live issuance and settlement of tokenized assets to test distributed ledger technology in regulated market infrastructure. The regulators believe that tokenization can enhance the speed and efficiency of issuing, trading, and settling assets in wholesale markets. The Bank of England also published a consultation on extending Real-Time Gross Settlement (RTGS) and Clearing House Automated Payment System (CHAPS) settlement hours, with plans to launch a live synchronization service in 2028 to allow tokenized assets to be used as collateral. The FCA is reviewing client asset rules and recently published a policy statement on fund tokenization, reflecting the broader UK digital finance push that aims to regulate stablecoins and tokenized deposits under a single payments framework. The Digital Securities Sandbox is expanding to include tokenized deposits and regulated stablecoins as settlement assets, with the addition of the wholesale market consultation focusing on securities, collateral, and post-trade systems.
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