Investment Operations


Artificial Intelligence

SETL, the London-based enterprise DLT and blockchain company, has delivered an innovation pilot project for SWIFT that implemented a common framework linking tokenization systems between CSD’s and global custodians. In a series of experiments, SETL, SWIFTClearstreamNorthern Trust and other market participants explored the issuance, delivery versus payment (DVP), and redemption processes to support a frictionless and seamless tokenized asset market. The experiments used established forms of payment and central bank digital currencies (CBDCs).

The report including the results of this pilot will be published ahead of SWIFT’s annual SIBOS conference.

Financial market infrastructures are already embracing tokenization by supporting the full lifecycle of digital securities. In fact, according to HSBC, the market for tokenized assets is expected to reach US$24 trillion by 2027. In response, SWIFT is undertaking a series of experiments alongside market participants from the tokenized and traditional asset ecosystem to explore how it can support the growth and development of the tokenized asset market.

According to Vikesh Patel, Head of Securities Strategy, SWIFT, their vision for instant and frictionless transactions not only applies to traditional securities instruments but also to new asset classes as well. “The insights from this exercise with leading capital markets participants will help us define and prioritize the concrete steps required to enable seamless processes for tokenized assets,” Patel said.

Analysts say one of the key risks in a world where tokenized and traditional assets co-exist is that it will create a multiplicity of technologies, platforms, and regulatory environments. SWIFT said its focus will therefore be on ensuring interoperability, interconnecting market participants, and simplifying their operations by completing activities centrally that would otherwise be performed bilaterally between institutions.

SETL said it worked with SWIFT and the other participants in a number of experiments involving the integration between the various DLT environments and with transaction orchestrations by using their PORTL suite of products. According to company literature, PORTL provides a robust and permissioned toolset for financial institutions to build applications that interoperate between existing infrastructures and a range of enterprise ledger technologies including Corda, Besu, Fabric, DAML and SETL’s own high-performance ledger. “We are entering a pivotal moment of history by connecting the dots between SWIFT and the new tokenized world, Marjan Delatinne, Head of Payments, SETL said. “This experiment could lay the foundation for universal interoperability between participants and systems during the transactional lifecycle of tokenized assets,” Delatinne added.