Bank of England Opens Crucial Consultation on Tokenized…
By Tobi Opeyemi Amure
AI summary of the source article
The Bank of England has launched a consultation clarifying how central counterparties can accept tokenized collateral under existing regulations. The proposed guidance aims to maintain risk and stability standards while supporting innovation in financial market infrastructure.
Why it matters
The Bank said tokenization could help firms "mobilize and manage collateral more quickly and efficiently, including across jurisdictions," which could "help clearing members respond to margin calls more effectively and allow CCPs to improve collateral management."
Key facts
- The Bank of England proposed a Supervisory Statement on how central counterparties can accept tokenized collateral, with responses due by 12 February 2027.
- The framework requires tokenized collateral to be valued, transferred, and realized under stressed market conditions under the principle of 'same risk, same regulatory outcome'.
- DTCC launched its Tokenization Service on 28 October, enabling eligible participants to create tokenized representations of securities held in DTC custody.
Source excerpt · FinanceFeeds
The Bank of England (BoE) has launched a consultation on how central counterparties (CCPs) can accept tokenized collateral under the existing regulatory framework, which it said does not prevent them from doing so. The consultation proposes a Supervisory Statement to clarify how the Bank would assess applications involving tokenized collateral while maintaining existing risk management and financi…