The Securities Industry and Financial Markets Association, a trade association of financial services firms, will undertake an exercise of tokenized settlement trials.
Mastercard, Citi, J.P Morgan, and a host of other financial services companies are partnering for a project for tokenization in finance. The group will implement tokenized settlement trials leveraging digital ledger technology. Meanwhile, the banking firms will test a digital ledger technology called Regulated Settlement Network (RSN).
The Securities Industry and Financial Markets Association (SIFMA), a trade lobby group of these companies, has initiated the project. The association announced this development with a press release. It noted that it was exploring a method for a common platform to execute bank settlements. The RSN will enable settlements of Treasury debt instruments, commercial bank money, and other assets.
Further, the press release quoted the Managing Director of SIFMA saying, “This exploration of shared ledger technology is an important initiative to explore innovations working with digital forms of USD cash and securities, as market participants continue to innovate to support efficient, resilient capital markets.”
Executives from Mastercard and Citi also praised the project and spoke on its potential. Raj Dhamodharan from Mastercard noted how blockchain technology was maturing and becoming important for public and private organizations. Moreover, he stated how tokenization in finance could power 24*7 programmable settlements.
The Federal Reserve Bank of New York’s New York Innovation Center (NYIC) will be a technical observer in this project. The NYIC will observe how the project could benefit settlements between financial institutions.
On the other hand, the press release also noted the various important aspects of this exercise. It includes industry collaboration, scope, legal analysis, findings, and future research. Besides, tokenization in finance has also received an endorsement from the Hong Kong Monetary Authority this month,
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