Asset managers plan tokenisation push
Almost half of global asset managers plan to offer tokenised investments to their clients within the next year, according to a recent report by Clearwater Analytics, which surveyed fund managers in Asia Pacific, the US, and Europe.
The process of tokenisation involves converting ownership of an asset into a digital representation, or token, recorded on a distributed ledger which can function as a new form of fund currency, replacing or augmenting traditional units in a managed investment scheme (MIS).
Adoption Rates Vary by Manager Size
Asset managers with assets under management between US$5-50 billion ($7-70 billion) are less likely to offer tokenised investments, with only 14% currently doing so. In contrast, 40% of larger managers and 56% of smaller ones already offer these investments.
This planned adoption is consistent across managers of all sizes, with 44% of large, 45% of mid-sized, and 44% of small managers planning to offer tokenisation in the near future.
Factors Driving Tokenisation Adoption
The move comes as asset managers explore ways to improve operational efficiency, broaden investor access, and modernise infrastructure to capture investor appetite for private markets.
Theoretical for most of the industry only a few years ago, tokenisation is now treated as imminent. Its appeal lies in turning hard-to-access private assets into fractional, tradable holdings that can be sold to a far broader base of investors. While asset managers believe strongly in tokenisation, there is a clear preference for private credit (96% of those surveyed) compared to private equity (56%).
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Industry Collaboration and Progress
In response to the financial services sector’s increasing interest in tokenisation, the ASX has set up an industry working group, which includes the Stockbrokers and Investment Advisers Association (SIAA). A discussion paper is forthcoming, aiming to build on recent initiatives such as the RBA’s Project Acacia and ASIC’s Financial Markets and Innovation Roundtable.
The ASX is conducting industry working groups and stakeholder consultations with market participants, customers, and industry bodies to capture industry perspectives, test potential use cases, and identify areas of consensus and challenge as the market evolves. This includes areas such as fixed income collateral, derivatives clearing, asset issuance, trading, and market access, as well as the IPO process.
A spokesperson for SIAA said: “We are excited to have a front seat and learn from the other participants, including our member firms on the practical applications of tokenisation.”
Platform Leaders Explore Tokenisation Opportunities
Last month, platforms CFS and Netwealth both stated they are exploring tokenisation opportunities, including tokenised annuities. Matt Heine, chief executive of Netwealth, said the company has been exploring tokenisation for the past two years.
On platforms it’s critical as the industry becomes more complex and complicated and we end up being a custodian of multiple investment chains and tokenisation of everything occurs.
