BoE and FCA seek industry input on tokenized UK markets

The Bank of England and the Financial Conduct Authority opened a joint consultation Monday asking banks, asset managers, trading venues, market infrastructure providers and fintech firms to give feedback on regulation, infrastructure and market practices for tokenized wholesale securities in the UK. Responses are due July 3.

The consultation focuses on tokenized securities such as bonds, equities and fund units. It seeks views on prudential rules, the use of tokenized collateral and settlement instruments and forms part of the government's Wholesale Financial Markets Digital Strategy.

Regulators invited input from central securities depositories and central counterparties, trading venues, post-trade service providers and technology firms developing tokenization solutions. The consultation notes authorities may later expand the scope beyond securities.

After the July 3 deadline the FCA and Bank of England will run industry workshops, publish a feedback statement in summer 2026 and issue a cross-authority roadmap for digital wholesale market development later in the year. Responses will inform proposed approaches to prudential treatment, tokenized collateral and settlement in tokenized environments.

The consultation follows existing testing and policy work. The regulators created a Digital Securities Sandbox, a regulated environment for firms to trial issuance, trading and settlement of tokenized securities; 16 firms have passed the sandbox's initial stage and are progressing toward live testing. Separately, the Bank of England has consulted on extending RTGS and CHAPS settlement hours toward a near-24/7 model in stages.

The Bank of England also committed to a live synchronization service targeted for 2028 to allow tokenized equivalents of already eligible assets to be accepted as collateral at central counterparties and for use in central bank operations.

In April the FCA published a policy statement setting out a framework for wider use of tokenized funds. The statement introduced optional direct-to-fund dealing rules for investors to transact directly with authorized funds and provided guidance for fund managers keeping unitholder registers on distributed ledger systems.

The joint statement listed expected benefits of tokenization, including potential efficiency gains in fund management, expanded distribution routes and broader access to private markets and infrastructure investment. The regulators noted the Wholesale Financial Markets Digital Strategy identified tokenization as an opportunity, particularly in post-trade processes and collateral.