The Financial Conduct Authority has published guidance on how firms can use distributed ledger technology within the regulator’s existing rules.
Newly introduced rules have been implemented with the intention of making fund dealing more efficient, including an optional Direct to Fund model. This looks to ensure that investors deal directly with the fund, whether traditional or tokenised.
Tokenisation is a way of representing an asset, or ownership of an asset, using distributed ledger technology, which also underpins innovations such as blockchain. Tokenisation has the potential to lower costs and open up investment opportunities to a wider audience.
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, namely a clear, practical framework that provides confidence in how fund tokenisation can operate within our rules, both now and into the future.”
The policy statement also sets out how fund tokenisation could develop over time as part of the FCA’s roadmap for digital assets.