Tokenise Launches Regulated Exchange For Digital Securities
Tokenise Stock Exchange is hoping to attract between 15 and 20 listings to the regulated exchange for digital securities, which supports the trade lifecycle from issuance to settlement and custody.
The exchange has partnered with GMEX Technologies which provides multi-asset digital and conventional exchange and post-trade business and technology .
Mike Kessler, chief executive and founder of Tokenise Group, told Markets Media that the exchange focuses on securities in regulated markets and not cryptocurrencies, although it uses the same technology.
Kessler said: “There are not many digital markets that are focussed on both primary and secondary securities markets. Incumbent exchanges have looked at digital securities but have legacy technology.”
He continued that he expects growth on Tokenise to come from the more esoteric assets, such as fractional ownership in physical assets such as property and art or a share of a royalty scheme, rather than tokenising traditional securities.
Tokenise operates out of London and the Caribbean and is licensed in Barbados. Kessler said any company globally can list securities on the exchange and global investors can trade, expect from the US.
Richard Johnson, founder and chief executive of Texture Capital, told Markets Media: “There are many regulatory friendly jurisdictions like Barbados, Gibraltar and Malta, I think we will need to see platforms get licensed in places like Us, UK and the European Union before this space really takes off.”
Texture Capital is aiming to use blockchain technology and smart contracts to streamline the current market structure for private placements by supporting the issuance and trading of digital securities.
Kessler said he hopes that the first issuance on Tokenise will be in September or October the year, dependent on the status of the Covid-19 pandemic.
“Investors will initially be high net worth individuals and institutional adoption will be a process,” he added. “We are at the very start of the tokenisation market.
— GMEX (@GMEX_Group) June 2, 2020
Tokenise uses the GMEX Fusion hybrid centralised and blockchain distributed ledger technology. GMEX Group has also taken a minority equity stake in Tokenise and chef executive Hirander Misra has joined the Tokenise board as group director alongside chairman, Martin Graham, former director of markets at the London Stock Exchange
Johnson said: “GMEX are a first class technology provider – first in traditional markets and now in digital.”
Misra told Markets Media that the core trading and digital custody technology had already been developed by GMEX but firm had to develop new functionality to enable the full token issuance process.
Growth of tokenisation
Misra said: “We have experience of working in the regulated space and tokenisation will happen faster than the market expects.”
For example, he highlighted that Fidelity Digital Asset Services already offers custody and trade execution services for digital assets to investors such as hedge funds, family offices and market intermediaries in the US. In December last year Fidelity announced it was launching an entity to provide digital services to European institutions.
Misra continued that some banks are also beginning to offer prime brokerage for digital assets and custody of stablecoins.
Johnson said in blog that private markets are ripe for disruption as seen by the number of companies entering the space.
In April, GTS, the electronic market maker, announced their plans to create a trading platform for private company securities,” wrote Johnson. “Carta, the software company specializing in cap table management tools, unveiled their plans to enable secondary trading in private securities, while established players Forge and Sharespost announced a tie-up.”
He added that creating a liquid secondary market for private securities will not simply be a case of replicating the public market systems. For example, Texture Capital will be able to support future innovations such as real-time delivery versus payment settlement by implementing blockchain at inception.
The Monetary Authority of Singapore expects live deployment of blockchain following its successful testing.
The not-for-profit initiative will make it easier to ensure funds are comparable and clear about costs.
An increasing number of firms are using distributed ledger technology.
Societe Generale paid for covered bonds in digital euros issued by Banque de France via blockchain.
The equity derivatives clearing organization has selected Axoni to develop and implement DLT.