With 75 percent of CSDs having somehow experimented with tokenisation, and most securities DLT projects now running on a commercial-viability basis, one question is coming to the fore: Will it give us and our markets bang for the buck? At the World Forum of CSDs in Prague, Clearstream’s Jens Hachmeister and four fellow speakers formed a panel to discuss today’s state of tokenisation in capital markets. 

One of the starting points for the discussion was how the two worlds of DLT native and traditional book-entry securities work together. Speakers on the panel were … 
Barnaby Nelson (Moderator), CEO, The Value Exchange,
Jens Hachmeister, Managing Director, New Digital Markets, Data & Issuer Solutions, Clearstream,
Vipin Y.S Mahabirsingh, Managing Director, Central Depository & Settlement Co. Ltd, CSD Mauritius,
Andreas Lundell, AVP Head of Product, CSD Technology, Market Technology, Nasdaq, and
Ian Salmon, Capital Markets Advisor, r3.

Ultimately, few people today seem to doubt that distributed ledger technology, including blockchain, could have a great advantage in securities transactions and safekeeping … in principle. Even so, with the existing global infrastructure in place, this does not automatically mean it’s where things will go. And it definitely doesn’t mean that institutions can assume a DLT project to be profitable for them. 


Making this point in a tounge-in-cheek way, Mauritius’ CSD head Vipin Y.S Mahabirsingh started out by sharing a list of applications where we are under the illusion that it is DLT that is bringing a change, though the big difference can rather be traced to differences in the underlying economic setup. Examples: 
• “Atomic” (immediate) settlement, actually enabled by prefunding rather than by DLT. 
• The “Golden source” function. Actually well possible to play by CSDs in jurisdictions where records are kept at beneficial-owner level – as is the case in many of the world’s smaller markets. 
• More seemless issuance could easily be possible on traditional platforms if exchange listing requirements were not as onerous as they are. 

Overall, the panel seemed to agree that DLT is not a silver bullet. Like any tech project, any DLT implementation must begin with a clear view of what improvement is targeted from the viewpoint of each unique business. Andreas Lundell advocated starting with simple applications rather than complex ones.

• The World Forum of Central Securities Depositories runs in Prague 24–26 May 2023. Our coverage of it is listed here.

(Our posts will be low on direct quotes, as the event welcomes journalists on the condition that such must be explicitly confirmed with each speaker, which adds an operational hurdle.)