Is tokenisation of securities markets the nemesis or the apotheosis of the CSD?

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It is easy to portray the tokenisation of securities as a mortal threat to central securities depositories (CSDs). In principle, security tokens issued on to blockchain networks can dispense with all the core functions of a CSD in safeguarding the integrity of issues, maintaining a register of investors, settling transactions in central bank money, distributing entitlements and maintaining accounts for custodian banks acting on behalf of investors. That is why most of the discussion about the future of CSDs since the tokenisation of securities was first broached in 2018 has focused on the escape routes rather than the paths to the future. CSDs could appoint themselves operators or “governors” of the private, permissioned networks that looked likeliest to be adopted by incumbent financial institutions such as investment banks, custodian banks and asset managers. They could run the Know Your Client (KYC), Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT) and sanctions screening checks to filter the issuers and investors that aspired to belong to these networks. CSDs could offer their classic services to the new classes of asset-backed tokens that were expected to emerge from the real estate, fine art, fine wine and collectibles markets, by developing digital wallets and atomic settlement services. By these means, they could make even the Decentralised Finance (DeFi) markets safe for institutional money. Unsurprisingly, when confronted by such defensive tactics and a diverse range of options that were not strategically coherent. many CSDs seemed unable to act at all. Lately, a more positive outlook has become clearer. Central Bank Digital Currencies (CBDCs), by putting central bank money on to blockchain networks, appears to solve the biggest obstacle to settling security token transactions. Even the adventurous institutional investors, dabbling in crypto-currency and token investing for the first time, have made clear they prefer to do so in the company of regulated financial institutions and financial market infrastructures. At least some of the two dozen or so security token exchanges that have emerged incorporate a CSD function, partly because unreconstructed securities laws and regulation insist upon it, but mainly because institutional money feels more comfortable with it. At this webinar, Future of Finance joins forces with The Africa and Middle East Depositories Association (AMEDA) and sponsors Percival Software, a leading provider of CSD systems, to ask: Is tokenisation the nemesis or the apotheosis of the CSD?

Some of the topics to be discussed:

1. Will tokenisation of securities kill, maim or transform CSDs?
2. Does the current size of securities token markets argue for a masterful period of inactivity?
3. Has the idea of saving issuers and investors money by disintermediation died?
4. Are the costs of post-trade intermediation so high that they warrant disintermediation?
5. Which intermediaries are at greater risk of disintermediation than CSDs?

Panellists

Vipin Mahabirsingh, Managing Director at Central Depository & Settlement Co. Ltd

Chris Richardson, CEO at Percival Software

Andrea Tranquillini, Senior Post Trade Market Infrastructure Executive

Mark Smith, CEO and Co-Founder at Symbiont

Vic Arulchandran, Co-Founder at Nivaura

Moderator

Dominic Hobson, Co-Founder and Editorial Director at Future of Finance

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