Digital collateral – a practical reality: report

Explore how tokenisation is changing collateral mobility, liquidity management and the range of assets firms can use across 24x7 markets.

In Partnership with

Produced in partnership with Citi, the report brings together a series of in-depth case studies from leading institutions to examine how digital collateral is being used across institutional markets.

The cost of idle collateral

Economics

Text showing USD 346 million as annual lost income per tier 1 firm.

Tokenisation has the potential to enhance asset mobility, operational efficiency, liquidity management and transparency.

Idle collateral can create a significant opportunity cost when assets cannot be deployed efficiently.

Putting collateral to work

Mobility

A gauge indicates that 25% of collateral holdings currently sit idle.

Legacy market infrastructure was built for daylight hours, but risk does not sleep.

Tokenisation can help firms mobilise collateral beyond traditional settlement and banking hours.

Corrective measure

Problem

Stacked area chart illustrating 6-7% of firms posting more collateral than needed.

Better too much than too little - to country high risk of failed collateral transfer.

The average firm today is posting 6-7% more collateral than they need to.

Collateral management is being reshaped by markets that increasingly operate beyond traditional settlement and banking hours.

Digital collateral: a practical reality examines how institutions are using tokenisation to make collateral more mobile, support faster margining and reduce the operational constraints that can leave assets idle or over-collateralised.

The report looks at:

practical approaches to 24x7 collateral mobilisation
how tokenisation can reduce pre-funding and settlement friction
the growing role of tokenised money market funds
the use of US Treasuries, digital assets and private securities as collateral
the technology, risk and operating model considerations that still matter

Through case studies and industry research, the whitepaper provides a practical view of where digital collateral stands today and what firms need to consider as adoption develops.

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