Bank of England says CCPs may accept tokenised collateral, opens consultation
Victoria Shinder2 min readThe Bank of England launched a consultation on 29 October on how central counterparties, the clearing houses that stand between buyers and sellers in derivatives and other markets, can accept tokenised forms of the collateral they already take.
The Bank's starting position is that the current regulatory framework does not stop a CCP from accepting tokenised collateral, as long as it meets the standards required in central clearing. In particular, it must remain capable of being valued, transferred and realised when needed, including in stressed conditions. The proposed supervisory statement is meant to make clearer how the Bank would assess an application from a CCP that wants to do this, and it applies the principle of "same risk, same regulatory outcome": different tokenised arrangements may reach those standards in different ways.
The case the Bank makes for tokenisation is operational. Collateral recorded on a shared ledger could be mobilised and managed faster, including across borders, which could help firms meet margin calls and manage collateral more efficiently. Deputy Governor Sarah Breeden described the work as delivering the Bank's secondary objective of innovation in financial market infrastructure while maintaining stability, and as part of a wider effort with the FCA and HM Treasury on the UK's wholesale digital markets strategy.
The consultation closes on 12 February 2027. The Bank invites responses from CCPs, their members, infrastructure providers and technology firms.
What it means
The sentence that matters is the stress test: collateral has to be sellable on the worst day, which is when margin calls are largest. By saying the rules already allow tokenised collateral that passes that test, the Bank shifts the question from whether it is permitted to whether a given token can prove it. Clearing houses now have a document to build applications against, and the date that will show whether any intend to is the February deadline.