Pre-trade
Tokenisation
and Custody
From interest rate derivatives to voluntary carbon credits, this is a rapidly evolving landscape, with digital assets significantly reshaping the OTC derivatives market.
Counterparties such as banks and asset managers negotiate deals for these assets, with creditworthiness and risk assessment crucial before entering into contracts.
Converting traditional assets, such as securities or commodities, into digital tokens facilitates collateral mobility through fractional ownership and faster settlement times, thereby helping to improve liquidity.
Tokens representing a digital twin of real-world or native digital assets on blockchain, with platforms managing the creation and distribution of these tokens, including compliance.
Use Cases
We are focusing our efforts on solving six market-validated primary use cases. Together they address critical challenges in the market.
Use case 01
Creating a
Golden Record
To maximise the benefits of a golden record for OTC trades, it is essential to maintain metadata and event records that are compliant with ISDA standards, synchronised and complete with timestamped verification from each party throughout the trade’s lifecycle management.
Problem
OTC trades are bilateral between two counterparties and are designed to provide flexibility in taking and managing financial exposures. A variety of different and often bespoke, siloed and disparate services and systems are employed by market participants to record and manage these trades. Without standardised protocols to reconcile trade data post-transaction, the process becomes time-consuming and error-prone.
Who Benefits
- 1.
Primary
C-level or Head of Trading, Product or Operations - 2.
Secondary
Compliance, Regulators, Other service providers
Managers
Funds
Treasury
Houses
Modules
Console
API
Entity Set-up
Blockchain Services
Tokenisation
CDM
Rules & Event Engine
Solution
The Tokenovate platform captures trades at their legal inception, and integrates with FINOS’s Common Domain Model (CDM). This integration establishes a new standard framework for capturing complete and accurate trade metadata by tracking the origin, transformation and movement of data throughout its lifecycle. Each trade record is then linked to a smart contract that manages its lifecycle.
Trade data and smart contract details are recorded into a UTXO (Unspent Transaction Output) on the blockchain, as each UTXO has a unique identifier that tracks its origin and ownership. At this stage, both parties confirm the accuracy of the data with a timestamp and TX hash, which serves both as a unique identifier and proof of agreement. This verified data set remains with the trade throughout its life, forming a ‘golden record of truth’ accessible and usable as needed by authorised parties.
Smart contract technology, in conjunction with CDM, continuously updates data and events throughout the trade lifecycle, ensuring that this record remains current, complete and correct. Designed to be asset-class agnostic, the platform can accommodate any asset class and instrument type supported by CDM.
The Tokenovate Platform is accessible via a SaaS Console and API service.
Use case 02
Tokenisation
of Assets
Tokenisation facilitates efficient digital ownership records. Utilising UTXO protocols, it creates and maintains these records, managed by smart contracts, in compliance with institutional regulatory standards. This approach enables fast, risk-free transfer of ownership with robust, scalable checks against double-spending. Tokenisation applies to both native digital assets and digital twins of real-world assets (RWAs). Benefits include enhanced tradability, accessibility, fractionalisation and liquidity, improving their utility in trading and as collateral.
Problem
Traditional and alternative real-world assets (RWAs) are increasingly sought after by investors for use as collateral in OTC trades and financing activities. This demand is being driven by rising global capital costs, which are influenced by de-globalisation, ongoing quantitative tightening, and new Basel III banking regulations.
Who Benefits
- 1.
Primary
C-level or Head of Trading,Treasury and Product - 2.
Secondary
Compliance and Operations
Managers
Managers
Managers
Banks
Modules
Console
API
Entity Set-up
Blockchain Services
Tokenisation
Solution
The Tokenovate platform provides a framework and protocol solution to digitise asset ownership and events through smart contracts, which are linked to data stored in private ledgers on a public blockchain. This protocol facilitates the creation of digital assets, managed via smart contracts, that can adhere to the highest governance and regulatory compliance standards.
Digital assets can be created natively or derived from a Real-World Asset (RWA), where the physical asset provides fully backed security for its digital representation. The legal definition of the token is determined and controlled by private keys, with ownership traceable back through these keys from the clean coinbase that underpins each entity’s private ledger on the platform.
All token activity and data are recorded within an entity’s private ledger, which can interface with smart contracts. These contracts offer significant flexibility in defining the uses and control mechanisms of the token.
Access to the tokenisation service is provided through the Tokenovate Console and APIs.