MAS Expands Tokenisation Pilots

The Monetary Authority of Singapore (MAS) has announced the expansion of its initiatives to scale asset tokenisation for financial services, partnering with industry associations and financial institutions to drive common asset tokenisation standards in fixed income, FX and asset & wealth management.

MAS also announced the successful completion of the first phase of the Global Layer One (GL1) initiative and plans to develop standards, market practices and governing principles of foundational digital infrastructure for tokenised assets. A white paper has been published to highlights the design principles, objectives and considerations, as well as potential uses of, GL1.

MAS says GL1 plans to expand collaboration with more policymakers, central banks, regulators, international standards setting bodies and financial institutions as work on GL1 progresses. In the next phase, it will explore the establishment of a non-profit organisation (GL1 Org) to develop common principles, policies and standards for operating a global shared ledger infrastructure. “This would complement the potential future establishment of independent operating companies that would build and deploy the GL1 infrastructure,” MAS states.
Project Guardian, which tests asset tokenisation use cases, is being expanded with the addition of the Global Financial Markets Association (GFMA), the International Swaps and Derivatives Association (ISDA) and the International Capital Markets Association (ICMA) to the group.

The association will be involved in three workstreams, ICMA and GFMA will work on the fixed income workstream, which will develop protocols and data specifications, building on ICMA’s Bond Data Taxonomy. The stream will also consider the types of risk factors and disclosures required in a tokenised bond offering document. Workstream members will also partner GFMA to develop standard clauses for implementing smart contracts of fixed income products.

The FX workstream will see ISDA and the Global Foreign Exchange Division (GFXD) of GFMA, develop FX data specifications, risk management frameworks, and FX documentation, while the asset and wealth management workstream will deepen collaboration with global custodians and asset managers, focus on common data models, and model risk considerations specific to fund tokenisation.

“Project Guardian provides a useful platform for central banks, regulators and financial institutions to understand the opportunities and risks of asset tokenisation while operating within a safe environment,” says Leong Sing Chiong, deputy managing director (markets and development), MAS. “The GL1 initiative is an important next step to realise the potential of asset tokenisation and reap efficiencies in capital markets. Such public-private partnerships are fundamental to ensure financial infrastructures continue to serve the needs of market participants and consumers, while maintaining market integrity and financial stability.”