19 hours ago
Lloyds and Aberdeen Investments use tokenised collateral for FX trades
In a UK-first, Lloyds Banking Group and Aberdeen Investments have used tokenised real-world assets as collateral for foreign exchange trades.
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Tokenised units of Aberdeen Investment's money market fund and tokenised UK gilts were issued, transferred, and securely held by FCA-regulated digital asset exchange Archax on the Hedera Hashgraph public permissioned blockchain.
Archax says digital assets can be programmed to automatically follow the rules of trading agreements streamlining the margining process, reducing operational costs, enhancing collateral efficiency, and minimising counterparty risk.
Wider adoption of tokenised funds as collateral could also help reduce systemic risk during periods of market stress by enabling digital transfers instead of forced asset sales, thereby reducing volatility.
Peter Left, head, digital finance, Lloyds, says: 'This groundbreaking initiative proves that digital assets can be used in regulated financial markets under existing legal frameworks here in the UK. It's a major step forward in demonstrating how tokenisation can enhance collateral efficiency, reduce friction, and unlock new trading opportunities.'
