🌐 Lloyds Bank and Aberdeen use tokenized collateral for foreign exchange operations on Hedera

🔹 Lloyds Banking Group and Aberdeen Investments conducted a foreign exchange (FX) transaction using tokenized collateral. Hedera's public and permissioned distributed ledger technology (DLT) hosted the tokenized assets. The assets involved were a tokenized Aberdeen money market fund and a tokenized UK government bond. Tokenized collateral allows for near-instant asset transfers, reducing reliance on cash for variation margin and improving settlement speed.

🔹 The UK dominates global foreign exchange and interest rate derivatives markets (43% share of a daily volume of approximately $15 trillion), making it an ideal candidate for these innovations. The transaction was conducted outside the UK's Digital Securities Sandbox (DSS), which is still pending approval. Montis, a subsidiary of Archax, has applied to join the DSS. Peter Left, Director of Digital Finance, highlighted the initiative's role in demonstrating that digital assets can operate within the existing legal frameworks in the UK and improve collateral efficiency. Archax issued, transferred, and custodied the tokens. It is backed by the Hedera Foundation and maintains investment ties with Aberdeen's parent company.

➡️ "Tokenized collateral represents an attractive use case for distributed ledger technology, as it allows for near-instant asset transfers. Delays in settlement currently force variation margin for derivative trades to rely on cash, leading to inefficiencies. The OTC foreign exchange and interest rate derivatives markets represent the largest markets in the world in notional terms, with approximately $15 trillion in daily volumes in 2022.