[ C O V E R
“There are a lot of assets that are not very tradable
and not very liquid, because by their nature they
are ‘old world’ assets, real estate for example,”
explains Margaret Harwood-Jones, global head
of securities services, Standard Chartered. “If you
can create them in a digitised form, then in terms
of marketability and tradability they move to a very
different league.
“We are working with the financial markets
business at the bank on another such opportunity
where they have structured finance products which
we are turning into digitalised form to allow for
more effective trading around those instruments.”
So in its most simplistic form you take an asset,
tokenise it and then create a digital representa-
tion through distributed ledger technology, with
the clear benefits being a lower barrier to entry, a
secure and efficient underlying technology and a
liquid asset.
Real-life examples
Whether this will take place through an existing
market infrastructure or pave the way for disrup-
tors to truly carve out a space for themselves in
modern finance, only time will tell. Both will likely
bid for their places in this new ecosystem, as we
await to see who will issue these tokens in question.
A real-life example of tokenisation occurred
with Andy Warhol’s 14 Small Electric Chairs
artwork, which was sold to qualified participants
on Maecenas, an art investment platform built
on blockchain, in the private beta launch of the
platform. The multi-million-dollar piece attracted
over 800 sign-ups within weeks and the auction
raised $1.7m for 31.5% of the artwork at a valua-
tion of $5.6 million.
Maecenas tokenised 14 Small Electric Chairs by
converting it into tamper-proof digital certificates
or “fractions” based on the Ethereum network.
Buyers then purchased fractions of 14 Small Elec-
tric Chairs with Bitcoin, Ether or the ART token, a
cryptocurrency created for Maecenas.
Tokenisation is not confined to these non-tra-
ditional assets either, with equities, bonds and
“Today the museum has to go to the
government to ask for money, tomorrow the
museum can tokenise a part of its collection
and the public can buy it.”
VALERIO RONCONE, HEAD OF PRODUCT
MANAGEMENT AND DEVELOPMENT, SIX
S T O R Y
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T O K E N I S AT I O N ]
commodities also primed for this feasible system
of the future.
“The numerous benefits for tokenising assets on
distributed ledger technology (DLT) are generally
speeding-up transaction times, improving trans-
parency, streamlining business processes, and
reducing costs,” explains Michael Tae, corporate
“There are a lot of assets that are not very
tradable and not very liquid, because by their
nature they are ‘old world’ assets.”
MARGARET HARWOOD-JONES, GLOBAL HEAD OF
SECURITIES SERVICES, STANDARD CHARTERED
vice president, corporate strategy, Broadridge
Financial Solutions. “But specifically for institu-
tional investors, I would breakdown the benefits
into three key areas. First, investors gain signif-
icant operational efficiencies into the markets
across the trading and post-trade lifecycle of the
securities industry. Secondly, increased portfolio
liquidity and velocity of alternative assets via
improvements in areas such as collateral manage-
ment. And lastly, from the creation of new avenues
for capital generation.”
But unlike the Warhol example, in the case
where you have tokenised an existing tradable
asset such as an equity or bond, how do you settle
in a fiat currency across multiple markets and
time zones?
STOs to be the talk of 2019
“On the one side you have a token for the digital
asset,” explains Tom Zeeb, head of securities and
exchange services, SIX. “If you digitalise the fiat
currency, create a token out of sterling or euros or
Swiss francs or dollars by segregating the underly-
ing currency in a CB account, then you can settle
real time, instantly, without having a liquidity gap
and you can also go across time zones.”
This is similar to the broad principle underpin-
ning depositary receipts, the difference being that
the account holding the fiat currency is under
the control of the central bank and the resulting
tokens would be used purely for settlement
purposes and not tradable in their own right.
Tokenisation is also being used to raise cap-
ital as an alternative to a costly and com-
plex initial public offering (IPO). With
initial coin offerings (ICOs) coming un-
der scrutiny from regulators and feeling
Winter 2018
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