Lloyds and Aberdeen Tokenise FX Trades with Archax

Tokenisation in markets continues apace with news that Lloyds Banking Group and Aberdeen Investments have used tokenised units of the latter’s money market fund as collateral in an FX transaction.

In what the firms are claiming as a “UK-first”, digital tokens were issued, transferred, and securely held by Archax – a UK FCA-regulated digital asset exchange – on the Hedera Hashgraph public permissioned blockchain. They add, “This trade demonstrates that regulated digital assets can serve as collateral in this market, which is a significant milestone. Digital assets can be programmed to automatically follow the rules of trading agreements streamlining the margining process, reducing operational costs, enhancing collateral efficiency, and minimising counterparty risk.”

While tokenisation remains very much on the periphery of markets, its influence in growing quickly, indeed the firms note that wider adoption of tokenised funds as collateral could help reduce systemic risk during periods of market stress by enabling digital transfers instead of forced asset sales – thereby reducing volatility. Graham Rodford, CEO and co-founder of Archax says the pilot “has established another key digital milestone in the foundation for a more open and efficient financial system”.

“Tokenisation has long been seen as a key enabler in the new world of digital innovation,” observes Emily Smart, chief product officer at Aberdeen Investments. “That’s why we are delighted to collaborate with Lloyds and Archax, to demonstrate real-world application of on chain collateral movements using tokenised assets. This demonstrates the ability of digital assets to streamline processes and increase efficiency.”

Meanwhile, Peter Left, head of digital finance at Lloyds, notes, “This initiative proves that digital assets can be used in regulated financial markets under existing legal frameworks here in the UK. It’s a major step forward in demonstrating how tokenisation can enhance collateral efficiency, reduce friction, and unlock new trading opportunities.”