Capital markets News

UK Treasury convening group to explore fund tokenization – report

uk funds tokenization

Andrew Griffith, Economic Secretary to the Treasury, is reconvening the Asset Management Taskforce to bolster the sector. According to Sky News, it will include a technology working group exploring fund tokenization and the use of AI, distributed ledger technology (DLT) and blockchain. Before becoming an MP, Griffith was CFO and COO at Sky.

A meeting was expected today with attendees including Patrick Thomson, CEO of JP Morgan Asset Management and chair of the Investment Association, Peter Harrison CEO at Schroders, and Anne Richards, CEO of Fidelity International.

Michelle Scrimgeour, the CEO of Legal & General Investment Management, will chair the technology working group.

Last year, the UK’s Investment Association called for the government and the FCA to create a framework for tokenized funds, and this could very well be the result. The Financial Conduct Authority launched a discussion paper to improve asset management in March. It included a question about whether fund tokenization was considered a high priority. 

While several UK players were early to the concept, more recently, foreign firms have woken up to the benefits of tokenization, including efficiency gains on the fund distribution side and the potential for greater liquidity through fractionalization opening up new investor groups.

Two early UK adopters of DLT in the asset management sector were Carlyle-owned fund distribution platform Calastone in 2019 and trade association TISA which launched blockchain-based TURN for MiFID cost reporting to clients. 

More recently, asset manager Abrdn has shown an interest in the sector, investing in digital asset exchange Archax and joining the governing council of the Hedera public DLT.

The UK can’t afford to fall behind, with countries such as Luxembourg adopting DLT friendly legislation, and international asset mangers such as BlackRockApollo and Hamilton Lane taking their first steps.