Capital markets News

ICMA, ISDA, GFMA join Project Guardian tokenization project

Project Guardian GFMA ISDA ICMA tokenization

The Monetary Authority of Singapore (MAS) announced that three major financial trade associations, ICMA, ISDA and the GFMA have joined Project Guardian. So far 24 regulated institutions have participated in the tokenization pilots, mainly on public blockchain. That’s up from 17 announced in November. Additionally, regulators from the UK, Switzerland and France are taking part.

Much of the Project Guardian work has involved developing DLT applications that involve adding permissioned controls onto the use of public blockchains because Guardian is a kind of sandbox.

However, MAS has reservations about using public blockchains as it believes they lack safeguards. That includes the lack of accountability and service level agreements at the network level and the anonymity of service providers. Hence it is working on its Global Layer One DLT project, a public permissioned blockchain network for regulated financial institutions. We covered the progress on this separately.

The new institutional participants are Alta Exchange, Euroclear, Deutsche Bank, Hamilton Lane, Moody’s, Phillip Securities and S&P Global Ratings.

Developing tokenization standards

A major impetus in the current phase of Project Guardian is the development of standards. Its three workstreams span fixed income, fx and asset and wealth management.

The fixed income workstream will leverage the International Capital Market Association’s (ICMA’s) Bond Data Taxonomy and explore tokenized bond offering disclosures. In the same workstream, projects will engage with the Global Financial Markets Association (GFMA) to develop standard clauses in smart contracts.

The International Swaps and Derivatives Association (ISDA) and GFMA’s Global Foreign Exchange Division (GFXD) will develop FX data specifications. Plus, they will explore risk management frameworks and documentation.

Standards work for the asset and wealth management workstreams will include common data models and modeling risks for fund tokenization.