FCA guidance supports fund tokenisation, new direct-to-fund model
The Financial Conduct Authority has published new guidance to support innovation in fund tokenisation. This includes new rules for more efficient fund dealing, introducing an optional Direct to Fund (D2F) model.
Unlocking DLT benefits
The Financial Conduct Authority (FCA) has issued new guidance to support innovation in fund tokenisation, allowing asset managers to use distributed ledger technology (DLT) within existing rules.
Tokenisation, which uses DLT to represent asset ownership, aims to lower costs and broaden investment access.
New rules also introduce an optional Direct to Fund (D2F) model, enabling direct investor-fund dealing for both traditional and tokenised products.
Simon Walls, executive director of markets at the FCA, noted the market's demand for clarity: 'We have focused on delivering what the market has asked for: a clear, practical framework that provides confidence in how fund tokenisation can operate within our rules, both now and into the future.'
The FCA developed this framework in close collaboration with the industry to enhance efficiency for asset managers.
UK's digital asset roadmap
John Allan, director at the Investment Association, described the guidance as a 'meaningful advance in the UK's approach to innovating funds market infrastructure.'
He praised the collaboration with the investment management industry, which provides confidence for public chain models and digital cash tools.
The UK, a prominent asset management hub overseeing £16.5 trillion in assets, considers supporting sector growth and innovation a key part of the FCA's strategy.
This policy statement outlines the future development of fund tokenisation as part of the FCA's digital assets roadmap.
The regulator also plans to engage with the industry on distributed ledger technology within UK wholesale markets.
Clarity, not revolution
This guidance provides much-needed regulatory clarity, which is essential for fostering confidence and adoption of DLT in asset management.
However, the actual pace of tokenisation will depend on broader market infrastructure developments and the willingness of firms to invest in new technologies.
While a foundational step, it represents an evolution of existing rules rather than a disruptive overhaul of the financial system.