Tokens enable actors in the distribution chain to create highly responsive products, break down barriers to access and will be an important part of the future investment fund ecosystem.
DLT, tokenisation and smart contracts are here to stay and are on the way to being a day-to-day reality in the investment fund industry. So argue the contributors to a recent book from ALFI, the Luxembourg fund association, which gathers together insight and ideas from companies active in building this future.
The book, “Tokenisation and Digital Custody in the World of the Investment Fund”, makes the point that tokenisation drives systematic change in the financial markets. This change will bring benefits to both investors and, if they embrace the changes, to all industry actors.
Tokenisation makes the many existing and complex processes related to transactions faster, simpler and cheaper. The latter is particularly important with investment fund actors dealing with long-term downward pressure on fees.
In general, security token offerings improve the both the primary issuance and the secondary trading phases. Tokens can be created and distributed much easier and faster. Additionally, throughout the fund lifecycle many events, such as corporate actions, can be automated. Ultimately, the fund creator will be able to reach a much larger investor base.
The practicality of tokenisation in the investment fund industry is clear. All that remains is large-scale adoption and this point is also examined in the book, with the conclusion that ‘the time of ‘wait and see’ is passed”.
Download “Tokenisation and Digital Custody in the World of the Investment Fund” from the ALFI site.