SFT Symposium Tokenised securities and the new collateral frontier
September 2026
At the ninth iteration of the Securities Finance Symposium in London, a group of industry experts sit down to discuss what tokenisation needs to do to drive the market forward, and the interoperability and architectural issues currently holding it back
Image: lee/stock.adobe.com
The Symposium’s fourth panel of the day centred on the impact of tokenisation on the securities finance market. With the technology enabling the real-time mobility of assets — irrespective of custodian time zone — and a new suite of intraday liquidity services, the securities industry is met with a host of exciting possibilities and looming regulatory and market hurdles.
Tokenised assets, particularly tokenised bonds, currently dominate the tokenisation landscape, according to the panel’s moderator — Steven Czarnota, head of digital at Tonic — which is “natural” given the high-volume, “backbone” nature of the instrument. To adopt the technology at scale, Czarnota believes that changing the settlement rails first, before looking to adopt the more “nascent” assets afterwards, “makes sense”, and the current approach to tokenisation is on the right path.
But what “locked” assets would benefit from tokenisation, exactly? Which securities could be turned into financing collateral, and what is the main thing holding them back right now?
There are a few key reasons why these nascent assets are “locked up”, in the view of Mike Lambert, securities lending product director at Broadridge. ETFs, for example, can be difficult to move as settlement can end up in the wrong place. Location is another important factor; time zones continuously pose problems for collateral managers on opposite sides of the world. Tokenisation, he says, can “solve a lot of those problems”. And, while there is still work to be done, freeing these instruments would make them reusable.
Another important facet to ensure the successful implementation of tokenisation is optimisation. For instance, a portfolio position does not need to be redeemed when tokenising a money market fund (MMF), which circumvents cash drag, according to Jennifer Keser, head of market structure and regulation for EMEA and APAC at Tradeweb. Avoiding what is a notable concern in TradFi infrastructure is demonstrable proof of its potential advantages.
Sabine Farhat, head of securities financing, lending, and repo product management at Murex, highlighted the fact that tokenisation opens up access to pools of liquidity that would have instead been sitting idly. The technology, she says, allows collateral managers to gain better risk assessment and valuation insights by letting them see the asset onchain.
Furthermore, Sam Edwards, managing director, Alpha Collateral Services at State Street, explained that the growing acceptance of tokenised MMFs as collateral signals a shift towards a more efficient digital collateral ecosystem where assets can move more seamlessly between market participants. As friction is reduced and accessibility improves, new investors and counterparties are drawn into the market, expanding liquidity and increasing utility.
Edwards added that the key question is how these benefits can be extended to a broader range of collateral assets and short-duration instruments. By improving collateral mobility and reducing operational friction, tokenisation helps create a “liquidity flywheel”: broader distribution creates utility, utility attracts participants, and increased participation deepens liquidity. This, in turn, makes the market more valuable and efficient for all participants, bringing more investors to the proverbial table.
The technology raises an interesting question: if collateral settles in minutes, how, then, does collateral optimisation evolve for tokenised assets, and how is more frequent optimisation balanced with factors like net settlement?
Fast settlement is “the most material change to the collateral framework”, in the eyes of Wassel Dammak, strategic account director for capital markets, Europe and the UK at Vermeg. In today’s markets, optimisation cycles are predictable. Obligations and inventory are collected, eligibility and concentration rules are applied, and funding and opportunity costs are considered. With the advent of tokenisation, the processing cycle has moved to real-time, which, according to Dammak, puts “more pressure on the decision-making”, as allocation and optimisation need to be as fast as settlement. Dammak emphasised the importance of striking a balance between the bases of the whole collateral process, and warned that phases running at different speeds will result in more buffers being held.
Looking further ahead, Edwards argued that a truly onchain environment could deliver the industry a “golden source of truth” for assets and liabilities. Greater transparency would give firms a real-time view of available inventory alongside their funding and collateral obligations, making it easier to determine how best to deploy, mobilise, and source assets. This enhanced visibility has the potential to improve collateral sourcing, liquidity management, and overall market efficiency.
But all of this becomes difficult to attain if regulators are unclear in their frameworks, and authoritative certainty is not consolidated across jurisdictions.
Czarnota emphasised the importance of regulatory readiness in unlocking the scale necessary to reap tokenisation’s rewards, reflected in the surge in activity over the last 12 months. For example, the US Securities and Exchange Commission (SEC) clarified rules around crypto assets; the European Central Bank (ECB) accepted distributed ledger technology (DLT)-issued securities; and the Bank of England (BoE) and the UK Financial Conduct Authority (FCA) published feedback on wholesale tokenisation.
However, he noted that there was more work to be done in terms of unlocking scale in securities finance.
Keser echoed this view. She believes that regulatory certainty is the obvious next step in ensuring the market continues to scale and take full advantage of tokenisation. The speed at which jurisdictions are moving — particularly the US — is, on one hand, very encouraging, she said. On the other hand, each regulatory authority appears to be moving in a different direction, and subsequently heading towards a more fragmented global market.
Another potential pitfall permeating the prospect of tokenisation is the premise of hybrid regulatory environments, where digital and traditional assets are subject to different legislation. This can be “very messy”, Lambert argued. The obvious way to get past this hurdle, he said, is to have one set of regulations to cover everything, which he believes is “unlikely to happen”.
Instead, the potential ramifications could have regulators scratching their heads, trying to work out what exactly an asset is, where in the hybrid environment it belongs, where it needs to be to get reported, and whether it needs to be reported to the Securities Financing Transactions Regulation (SFTR), or somewhere else because it is digital.
What, then, does the securities market need to avoid fragmentation?
The panel agreed that this is no small order. “Fragmentation is the biggest practical hurdle to overcome,” Dammak responded. Trying to fix each instance of DLT individually would result in “a less efficient overall system” and siloed collateral — the exact problems already plaguing TradFi venues.
If the market wants to avoid repeating today’s fragmented structure, Farhat argued that trusted IDs and orchestration layers are key enablers of interoperability at scale.
Without standardised asset identifiers across onchain environments and TradFi systems, she warned that firms run the risk of operating in silos, resulting in operational bottlenecks and potential double-dipping. Orchestration layers, Farhat explained, act as a bridge across disparate platforms, establishing a common set of books and records, and ensuring fluid, end-to-end collateral management and real-time data flow.
Edwards made the point that interoperability requires more than just connecting blockchains. Key enablers include a multi-chain wallet architecture, enterprise-wide visibility of assets and liabilities, and operational workflows that can support both TradFi assets and tokenised representations.
He emphasised the importance of selecting both the correct account and wallet structure for an institution’s operating model, all while maintaining a holistic view of inventory, obligations, and liquidity across the enterprise.
The industry’s need for interoperability, not isolated networks, was further highlighted by Keser. Tokenised securities must connect across platforms with existing market infrastructure, supported by common standards. Crucially, she said, the ecosystem needs an interoperable digital cash leg to enable true delivery-versus-payment. For Keser, the goal is clear: move from electronic to digital, not create a parallel market. Unfortunately, according to Lambert, institutions are not taking advantage of the tools that would allow for interoperability.
The Common Domain Model (CDM) — a digital blueprint for how financial products are traded and managed across their entire lifecycle — is not being utilised enough. He added that there is a “certain competitive advantage in not being interoperable”, particularly for triparty agents and other types of vendors. However, he believes that if the market forces enterprises to become interoperable, then they would do so.
If the securities industry is serious about moving forward, the panel concluded that common standards, such as the CDM, trusted IDs, and orchestration layers, would be crucial if the market is to adopt tokenisation at scale. But until that happens, institutions run the risk of repeating the fragmented, siloed architecture they already rely on.
Tokenised assets, particularly tokenised bonds, currently dominate the tokenisation landscape, according to the panel’s moderator — Steven Czarnota, head of digital at Tonic — which is “natural” given the high-volume, “backbone” nature of the instrument. To adopt the technology at scale, Czarnota believes that changing the settlement rails first, before looking to adopt the more “nascent” assets afterwards, “makes sense”, and the current approach to tokenisation is on the right path.
But what “locked” assets would benefit from tokenisation, exactly? Which securities could be turned into financing collateral, and what is the main thing holding them back right now?
There are a few key reasons why these nascent assets are “locked up”, in the view of Mike Lambert, securities lending product director at Broadridge. ETFs, for example, can be difficult to move as settlement can end up in the wrong place. Location is another important factor; time zones continuously pose problems for collateral managers on opposite sides of the world. Tokenisation, he says, can “solve a lot of those problems”. And, while there is still work to be done, freeing these instruments would make them reusable.
Another important facet to ensure the successful implementation of tokenisation is optimisation. For instance, a portfolio position does not need to be redeemed when tokenising a money market fund (MMF), which circumvents cash drag, according to Jennifer Keser, head of market structure and regulation for EMEA and APAC at Tradeweb. Avoiding what is a notable concern in TradFi infrastructure is demonstrable proof of its potential advantages.
Sabine Farhat, head of securities financing, lending, and repo product management at Murex, highlighted the fact that tokenisation opens up access to pools of liquidity that would have instead been sitting idly. The technology, she says, allows collateral managers to gain better risk assessment and valuation insights by letting them see the asset onchain.
Furthermore, Sam Edwards, managing director, Alpha Collateral Services at State Street, explained that the growing acceptance of tokenised MMFs as collateral signals a shift towards a more efficient digital collateral ecosystem where assets can move more seamlessly between market participants. As friction is reduced and accessibility improves, new investors and counterparties are drawn into the market, expanding liquidity and increasing utility.
Edwards added that the key question is how these benefits can be extended to a broader range of collateral assets and short-duration instruments. By improving collateral mobility and reducing operational friction, tokenisation helps create a “liquidity flywheel”: broader distribution creates utility, utility attracts participants, and increased participation deepens liquidity. This, in turn, makes the market more valuable and efficient for all participants, bringing more investors to the proverbial table.
The technology raises an interesting question: if collateral settles in minutes, how, then, does collateral optimisation evolve for tokenised assets, and how is more frequent optimisation balanced with factors like net settlement?
Fast settlement is “the most material change to the collateral framework”, in the eyes of Wassel Dammak, strategic account director for capital markets, Europe and the UK at Vermeg. In today’s markets, optimisation cycles are predictable. Obligations and inventory are collected, eligibility and concentration rules are applied, and funding and opportunity costs are considered. With the advent of tokenisation, the processing cycle has moved to real-time, which, according to Dammak, puts “more pressure on the decision-making”, as allocation and optimisation need to be as fast as settlement. Dammak emphasised the importance of striking a balance between the bases of the whole collateral process, and warned that phases running at different speeds will result in more buffers being held.
Looking further ahead, Edwards argued that a truly onchain environment could deliver the industry a “golden source of truth” for assets and liabilities. Greater transparency would give firms a real-time view of available inventory alongside their funding and collateral obligations, making it easier to determine how best to deploy, mobilise, and source assets. This enhanced visibility has the potential to improve collateral sourcing, liquidity management, and overall market efficiency.
But all of this becomes difficult to attain if regulators are unclear in their frameworks, and authoritative certainty is not consolidated across jurisdictions.
Czarnota emphasised the importance of regulatory readiness in unlocking the scale necessary to reap tokenisation’s rewards, reflected in the surge in activity over the last 12 months. For example, the US Securities and Exchange Commission (SEC) clarified rules around crypto assets; the European Central Bank (ECB) accepted distributed ledger technology (DLT)-issued securities; and the Bank of England (BoE) and the UK Financial Conduct Authority (FCA) published feedback on wholesale tokenisation.
However, he noted that there was more work to be done in terms of unlocking scale in securities finance.
Keser echoed this view. She believes that regulatory certainty is the obvious next step in ensuring the market continues to scale and take full advantage of tokenisation. The speed at which jurisdictions are moving — particularly the US — is, on one hand, very encouraging, she said. On the other hand, each regulatory authority appears to be moving in a different direction, and subsequently heading towards a more fragmented global market.
Another potential pitfall permeating the prospect of tokenisation is the premise of hybrid regulatory environments, where digital and traditional assets are subject to different legislation. This can be “very messy”, Lambert argued. The obvious way to get past this hurdle, he said, is to have one set of regulations to cover everything, which he believes is “unlikely to happen”.
Instead, the potential ramifications could have regulators scratching their heads, trying to work out what exactly an asset is, where in the hybrid environment it belongs, where it needs to be to get reported, and whether it needs to be reported to the Securities Financing Transactions Regulation (SFTR), or somewhere else because it is digital.
What, then, does the securities market need to avoid fragmentation?
The panel agreed that this is no small order. “Fragmentation is the biggest practical hurdle to overcome,” Dammak responded. Trying to fix each instance of DLT individually would result in “a less efficient overall system” and siloed collateral — the exact problems already plaguing TradFi venues.
If the market wants to avoid repeating today’s fragmented structure, Farhat argued that trusted IDs and orchestration layers are key enablers of interoperability at scale.
Without standardised asset identifiers across onchain environments and TradFi systems, she warned that firms run the risk of operating in silos, resulting in operational bottlenecks and potential double-dipping. Orchestration layers, Farhat explained, act as a bridge across disparate platforms, establishing a common set of books and records, and ensuring fluid, end-to-end collateral management and real-time data flow.
Edwards made the point that interoperability requires more than just connecting blockchains. Key enablers include a multi-chain wallet architecture, enterprise-wide visibility of assets and liabilities, and operational workflows that can support both TradFi assets and tokenised representations.
He emphasised the importance of selecting both the correct account and wallet structure for an institution’s operating model, all while maintaining a holistic view of inventory, obligations, and liquidity across the enterprise.
The industry’s need for interoperability, not isolated networks, was further highlighted by Keser. Tokenised securities must connect across platforms with existing market infrastructure, supported by common standards. Crucially, she said, the ecosystem needs an interoperable digital cash leg to enable true delivery-versus-payment. For Keser, the goal is clear: move from electronic to digital, not create a parallel market. Unfortunately, according to Lambert, institutions are not taking advantage of the tools that would allow for interoperability.
The Common Domain Model (CDM) — a digital blueprint for how financial products are traded and managed across their entire lifecycle — is not being utilised enough. He added that there is a “certain competitive advantage in not being interoperable”, particularly for triparty agents and other types of vendors. However, he believes that if the market forces enterprises to become interoperable, then they would do so.
If the securities industry is serious about moving forward, the panel concluded that common standards, such as the CDM, trusted IDs, and orchestration layers, would be crucial if the market is to adopt tokenisation at scale. But until that happens, institutions run the risk of repeating the fragmented, siloed architecture they already rely on.
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