FCA AND BANK OF ENGLAND OUTLINE TOKENISATION FRAMEWORK FOR UK MARKETS

The Financial Conduct Authority and the Bank of England have jointly set out an approach to tokenisation in UK wholesale markets, seeking industry views on the regulatory framework. Tokenisation converts real-world assets such as shares, bonds and currency into digital representations on a distributed ledger. The regulators stated that the process could streamline wholesale markets by accelerating securities issuance and asset management whilst reducing costs and supporting market efficiency and resilience.

The FCA and Bank of England said they had received feedback from financial firms requesting greater regulatory clarity and infrastructure certainty as tokenisation expands. The regulators outlined their approach across key areas including prudential treatment, tokenised collateral and settlement instruments. They have also initiated a discussion on core principles for regulation and infrastructure to facilitate tokenisation development in wholesale markets. Simon Walls, executive director of markets at the FCA, stated that tokenisation could reshape how assets are issued, traded and settled. Sarah Breeden, deputy governor for financial stability at the Bank of England, noted that both institutions have worked with government and industry to enable responsible adoption of tokenisation in retail and wholesale finance.

The move represents an effort to position UK wholesale markets competitively as digital asset technology develops globally. The regulators stated that their shared vision aims to provide industry with clarity to engage, invest and innovate. The Bank of England and FCA indicated that UK markets have historically adopted new technology and that this framework seeks to maintain the country's position at the forefront of global wholesale markets.