The Monetary Authority of Singapore (MAS) today announced plans to advance tokenisation in financial services.

These include:

• Forming commercial networks to deepen liquidity of tokenised assets;• Developing an ecosystem of market infrastructures;• Fostering industry frameworks for tokenised asset implementation; and• Enabling access to common settlement facility for tokenised assets.

Deepening liquidity of tokenised assets through formation of commercial networks

MAS has, under Project Guardian, convened over 40 financial institutions, industry associations and international policymakers across seven jurisdictions to carry out industry trials on the use of asset tokenisation in capital markets. To date, more than 15 industry trials have been conducted in six currencies across multiple financial products.

As Project Guardian participants commercialise their products and services following successful industry trials, MAS is facilitating commercialisation to take place in a coordinated, networked manner. By connecting a broader set of participants’ products and services across multiple currencies and assets, greater improvements in capital raising, secondary trading, asset servicing and settlement of tokenised assets may be realised. This will deepen liquidity across primary and secondary markets for tokenised asset transactions. To this end, Citi, HSBC, Schroders, Standard Chartered and UOB have formed the Guardian Wholesale Network industry group, with the intent of establishing a multi-member network to commercialise their respective asset tokenisation trials and scale usage.

Developing ecosystem of market infrastructures to facilitate seamless cross-border transactions

MAS launched the Global Layer One (GL1) initiative in 2023 to foster the development of foundational digital infrastructures, upon which commercial networks could be deployed. Since the launch, a core group of global banks, BNY, Citi, J.P. Morgan, MUFG and Societe Generale-FORGE have been leading efforts to define the business, governance, risk, legal and technology requirements of the GL1 platform.

To build on this, GL1 is expanding its scope to support the development of an ecosystem of compatible market infrastructures, enabling tokenised assets to be traded seamlessly across borders. Specifically, GL1 will undertake the following additional activities:

• Control Principles – Alignment on governance, risk management controls and settlement arrangement conventions for cross-border transactions. This provides clarity on roles, responsibilities and controls needed to safeguard market integrity and financial stability.• Specifications – Development of specifications for market infrastructures and asset lifecycle. This encourages interoperability between diverse systems.• Compliance by Design – Creation and provision of templates including programmable compliance checks to build an ecosystem of compatible service providers. This accelerates onboarding for new participants.

To support these developments, MAS is pleased to announce the addition of new industry participants, including Euroclear and HSBC. GL1 will also set up a new market infrastructure working group, comprising global financial market infrastructure providers, that will focus on digital asset securities control principles.

Industry frameworks for implementation of tokenisation

To facilitate broad based acceptance and implementation of tokenised assets by financial institutions, two industry frameworks developed by Project Guardian industry group members were published today.

• Guardian Fixed Income Framework (GFIF) – GFIF integrates the International Capital Market Association’s Bond Data Taxonomy, Capital Markets and Technology Association’s Token Standards, and the Global Financial Markets Association’s Design Principles for Tokenised Securities. This provides an industry guide to implementing tokenisation in debt capital markets, strengthening industry capabilities and catalyse adoption of tokenised fixed-income solutions.• Guardian Funds Framework (GFF) – GFF provides a set of recommendations for industry best practices for tokenised funds. This includes the Guardian Composable Token Taxonomy to facilitate the development of tokenised investment vehicles comprising multiple assets, simplifying the process of incorporating new tokenised funds, and help achieve efficiencies in fund settlement.

Re-disseminated by The Asian Banker