Market participants have identified a wide range ofopportunities for capitalising on Singapore’s status as a regional leader inasset tokenisation infrastructure.The Investment Management Association of Singapore (IMAS)has taken various steps to accelerate understanding and adoption oftokenisation among the investment community. One example is its support foreducation-focused initiatives, including a foundational e-learning moduledeveloped with support from Schroders, Baker McKenzie Wong & Leow andPhillip Capital.IMAS CEO Carmen Wee suggests that the industry can onlyprogress by building shared knowledge and readiness and says her organisation isuniquely positioned to help its members identify emerging opportunities.Automation, Transparency and Faster SettlementSo, what do these potential benefits look like? According toJustin Christopher, head of Asia at Calastone, some of the clearest gains areoperational: automation, transparency and shorter settlement cycles.“Integrated properly, tokenisationremoves manual reconciliation, embeds compliance into workflows and strengthensrisk control,” he says. “Commercially, it also extends distribution.Tokenisedinstruments can reach beyond traditional channels into digital-native platformsand new liquidity venues without stepping outside regulated frameworks.”Looking ahead, Christopher reckons the real opportunity ismarket-wide efficiency in the form of programmable assets interacting withtokenised cash and collateral, enabling delivery-versus-payment models and moreefficient capital movement.However, he acknowledges that this will only materialise iftokenisation becomes part of trusted market infrastructure where digital andtraditional instruments operate seamlessly together rather than in fragmentedparallel systems.“The infrastructure must support both models workingtogether efficiently and securely,” adds Christopher. “Tokenisation will onlysucceed when it is interoperable, production-grade and connected to globaldistribution networks.”Bridging Traditional Finance and Blockchain NetworksThe main current and potential future benefits of adoptingtokenisation are that financial entities may continue to use their current TradFi infrastructuretogether with a public blockchain infrastructure while avoiding the creation ofseparate processing silos for each asset class.Blockchain also allows for a shortening of the settlementcycle, continuous transactions without any cut-off, and fractionalisation ofassets.That is the view of Hubert Grignon Dumoulin, digital assetssenior expert at CACEIS, who notes that industry stakeholders benefit from thenetwork effect of the crypto assets ecosystem while supporting theinternet-based finance that is key to attracting digital-native investors andsimplifying cross-border distribution of financial products.“The increased scale will reduce operational costs, whileopening up new business models associated with DeFi protocols, organisationsand more,” he says. “This technological revolution promises to be sotransformative that market participants are cautiously studying the optimal andmost secure ways to embrace tokenisation.”Improving Collateral Mobility and Capital EfficiencyFor institutional investors, tokenisation can improvecollateral mobility and enable atomic settlement, reducing counterparty andoperational risk. For asset owners and investors, fractionalisation andprogrammability could expand access to assets that were previouslyoperationally complex or illiquid.“The longer-term opportunity is a more interoperablefinancial system where assets, cash and data move seamlessly across networks,unlocking new business models,” explains Alvin Chia, head of digital assetsinnovation Asia Pacific for Northern Trust.Real-time movement of high-quality assets and clearvisibility of exposures enhance liquidity and risk detection, agrees ChetanKarkhanis, SVP, digital asset partnership development at Franklin Templeton.“In the near future, the real upside is flexibility,” hesays. “Because tokenisation allows assets to be fractionalised, distributedmore broadly and embedded with logic that automates certain actions, it createsroom for new product design and more tailored investment access, particularlyin APAC, wherecross-border capital flows are significant. Over time, that flexibility couldlower barriers to entry and make markets more responsive to investor needs.”Real-Time Treasury and Asset MovementGiven the programmability of tokenised assets, certainprocesses can be further automated through smart contracts based on predefinedconditions to streamline workflows and lower operational costs.“Tokenisation could also support the real economy byenabling trade and financial assets to be distributed to a broader pool ofinvestors, potentially expanding access to financing,” suggests Ankur Kanwar,head of transaction banking & cash management, Singapore and ASEAN and global atStandard Chartered.The bank has introduced a tokenised SGD and USD accountbalances solution for Ant International on the latter’s blockchain-basedreal-time global treasury management platform, building on learnings from theMonetary Authority of Singapore’s Guardian initiative.“The solution was co-created with Ant International and aimsto enable it to future-proof its treasury and shift to real-time, 24/7 movementof value in SGD and USD,” says Kanwar.New Products and Broader Investor AccessTokenised products have opened up new distribution channels,particularly to digitally native investors, while stablecoins and tokenisedmoney market funds give users the ability to move value or rebalance riskwithin minutes rather than days.Meanwhile, tokenised gold products and oil perpetual futureshave gained traction for trading and hedging macro events that happen over theweekend or outside of conventional trading hours.“For institutions, the ability to post digital cash ortokenised treasuries intraday reduces settlement risk and improves collateralefficiency,” says Duncan Trenholme, managing director of TP ICAP Fusion DigitalAssets, who adds that the longer-term implications are more significant.When cash and collateral can move in minutes, fundingtransitions from broad overnight blocks to precise intraday slices. The shortend of the rates curve begins to reflect these finer temporal units, meaningcollateral spreads tighten and reuse cycles accelerate.“At the same time, on-chain-native derivatives lower themarginal cost of creating and servicing instruments, making it commerciallyviable to build more granular markets, meaning more bespoke exposures and moreacute trading strategies for clients,” adds Trenholme.“Examples include on-chain prediction markets and on-chainderivatives markets. The compression of time and the expansion of theinvestable universe is where the real commercial impact of tokenisation will befelt.”Lowering Barriers for Retail InvestorsFor retailinvestors, tokenisation has the potential to lower entry barriers throughfractional ownership and broaden access to traditionally illiquid assetclasses. On the other hand, it creates opportunities for intermediaries tostreamline post-trade processes and rethink distribution models.“Furthermore, if liquidity and standards mature over time,tokenisation could support more efficient capital formation and portfoliodiversification,” concludes Huan Kiat, fintech director at PhillipCapital.“Ultimately, its long-term impact will depend on whether it delivers tangibleimprovements in cost, access and execution compared with traditionalstructures.”This article was written by Paul Golden at www.financemagnates.com.