How tokenized collateral changes collateral management
EY and Transcend have published a joint analysis detailing how the emergence of distributed ledger technology (DLT) is creating a dual-rail system for collateral management. While traditional infrastructure relies on custodians and central securities depositories, tokenized assets are introducing new digital rails that promise faster settlement and improved liquidity. This shift forces financial institutions to navigate a complex environment where they must manage assets across both legacy systems and digital networks simultaneously. The report highlights that tokenization offers significant benefits, such as 24/7 mobilization and near-instant repurchase agreements, but warns that it also introduces new operational challenges. Firms must now solve for dynamic routing decisions, considering factors like counterparty acceptance, wallet structures, and varying settlement speeds. Ultimately, the authors argue that success depends on building unified operating models that provide visibility across both traditional and tokenized environments. This evolution is critical for the RWA market as it moves beyond experimentation into practical institutional use cases for collateral mobility.
