SWIFT Institute - Trading Tokenized Assets: Modern Exchange Market Infrastructure

Though the technology and practice of tokenization are nascent, its theoretical benefits include: efficiency gains driven by automation and disintermediation; transparency; improved liquidity potential and tradability of both liquid and illiquid assets; and faster and more efficient clearing and settlement. Such tokenization suggests a reconsideration of core financial market activities, from trading, pricing and liquidity of securities, to processes such as clearing and settlement. Just as cryptocurrencies rose to prominence as the payment infrastructure for dark-net marketplaces (Foley et al. 2019), before the disruptive benefits of tokenization can be realized, it is necessary to have in place the market infrastructure to support it. This infrastructure is what is currently evolving and form the focus of our study.