UK regulated digital asset exchange Archax today announced it facilitated tokenized collateral movement between Lloyds Banking Group and Aberdeen Investments to support a foreign exchange transaction.
The transaction involved a tokenized Aberdeen money market fund and a tokenized UK Gilt, both hosted on the Hedera public permissioned DLT platform.
Tokenized collateral represents a compelling use case for distributed ledger technology because it enables near instantaneous asset transfers. Settlement delays currently force variation margin for derivatives trades to rely on cash, which creates inefficiencies. The over the counter FX and interest rate derivatives markets represent the world’s largest markets in notional terms, with approximately $15 trillion in daily volumes as of 2022. The UK commands the largest market share at 43%, significantly exceeding any other jurisdiction, making it the country with the greatest need for tokenized collateral solutions.
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