Building the next generation of market infrastructure

Thank you to TheCityUK and Nasdaq for bringing us together this evening. 

It’s a fitting venue[2] for us to discuss market transitions: the former HQ of Midland Bank, which of course became part of HSBC.  

And now HSBC Orion has become the first entrant approved to provide live Digital Securities Depository services[3]. 

A useful reminder that financial infrastructure never stands still, and neither can we. 

A few years ago, discussions about digital assets were dominated by the technology itself. Could you tokenise a fund? Could you put a bond on a distributed ledger? 

Today, the conversations are about what the technology can enable, at what scale, and how fast… 

What this means practically for liquidity, capital formation, settlement.  

In other words: will these new technologies make markets work better? And how do we make that happen globally?

Why this matters for the UK

AI pervades every conversation. It is changing how market participants analyse information and manage risk.  

The pace of development of frontier AI is raising foundational questions about technology infrastructure, cyber and operational resilience. 

Technology is challenging basic assumptions about when markets operate at all. 

And tokenisation could make it quicker and cheaper to do business and open up new means of supporting capital formation. 

Some estimates[4] cite a potential benefit of around £33 billion to UK GDP, and £14 billion in tax revenues annually.  

And just this week the European Central Bank launched[5] wholesale digital payments. 

So, these emerging technologies are no longer ‘nice to have’. Harnessing them safely will be key to market integrity, competitiveness and growth. 

The UK starts from a strong position. Second largest global financial centre, sophisticated markets, trusted institutions, strong legal system. 

But international competition is accelerating. 

Around the world, exchanges, banks, investors, fintechs and policymakers are investing heavily in the next generation of market infrastructure. 

We cannot afford to be complacent. 

We don’t need to be able to predict exactly what the market of 2030 or 2035 will look like. 

But we do, collectively, need to move much faster to create the conditions for those technologies to scale in the UK.  

And go as far as we can – even if legislation cannot always move as quickly.

What kind of regulation is needed

We know that traditional regulatory and policymaking cycles do not work at the pace of the latest technological advances. 

So in fast-moving areas such as AI, for example, our focus is on understanding the risks and opportunities. 

Using existing frameworks where they remain effective, intervening only where outcomes require it, and doing all we can to enable safe innovation. 

A purposeful and proportionate approach that allows us to stay nimble and move with the speed of the market.   

We have stepped up our pace: 

• A policy statement[6] on fund tokenisation in April; 
• Authorising the UK's first fully native tokenised fund[7] in June; 
• Finalising the stablecoin regime[8], before the summer; 
• Progress on digital gilt issuance[3] and using stablecoins as settlement assets.[9] 

Earlier this year, together with the Bank, we asked industry for views[10] on the future vision for tokenisation in wholesale markets.  

I know many of you contributed, as well as to our consultations on stablecoins and cryptoassets – thank you. 

With more than 120 responses from different parts of the market, some themes came through: 

• Opportunities in post-trade – particularly in making collateral move more efficiently. 
• Potential obstacles around settlement, prudential treatment, and interoperability. Which also require work on insolvency and cross-border conflict of laws. 
• And perhaps the clearest message – a need for speed, and what some firms described as 'pilot fatigue'. 

Firms are clear: they want to move on from experimentation and sandboxes, towards full production and permanence.  

There were some areas with split views: 

• Where DeFI (Decentralised Finance) protocols are used, where should accountability rest – with the regulated persons, or the platform?   
• Should exposure tokens be treated as derivatives in line with their legal structure, or should they have to settle in a CSD or DSD (Central or a Digital Securities Depository)? 
• Some called for far-reaching legislation, including a Digital Property Act, or regular digital gilts issuance.  

You wanted CSDs and other financial markets infrastructure to move faster to move assets on chain, with forbearance if necessary from the authorities.  

And there will need to be proper examination of tax and accounting treatment. 

So work to do, but clear, constructive feedback, and industry engaged, ambitious, actively looking to invest and grow. 

Industry leadership will be just as important here as public policy – if not more so.   

The UK’s Digital Markets Champion, Chris Woolard, is playing an important role in coordinating the sector to drive forward adoption of tokenisation. 

But you are the ones who build, scale and innovate, moving beyond pilots to demonstrate commercial use.

What happens next

Looking ahead, the FCA will continue to play our full part in a systemwide approach. 

Our upcoming joint tokenisation roadmap with the Bank of England will set out a more comprehensive route from today's testing environments, to tomorrow's established market infrastructure.  

But while we need to rebalance risk appropriately to stay innovative and competitive, we cannot do so at the expense of investor protections or market integrity. 

And although tokenisation changes how assets can be held and transferred, it can’t be allowed to leave ambiguity about ownership. 

That is why, following feedback, we intend to consult on safeguarding rules for relevant tokenised investment assets. 

We also know that listed companies are asking what this new world means for investor engagement and stewardship, and we are engaging with the Confederation of British Industry and their members.   

Even more so as tokenisation and decentralised finance accelerate the emergence of continuous, potentially even 24/7, markets.   

With traditional regulated exchanges offering traditional or new contracts that may include micro contracts, digital versions of native derivatives offered by on-chain platforms, and tokenised versions of securities and derivatives, we see the rise of parallel market structures that operate alongside traditional markets.  

How these markets interact with each other in a continuous trading environment, is a key question.   

We need to understand the implications for liquidity, price discovery, market fragmentation, market resilience, and regulatory oversight. 

For equity markets in particular, this raises important questions as to how market disclosures may work in a more continuously traded environment. 

How public companies will be able to understand their investor base and the dynamics affecting it, what the implications may be for closed periods, and how market abuse can be monitored. 

We are already exploring agentic AI as our ‘first responder’ to speed up how we monitor wholesale markets, overseeing more than 9000 firms.  

Harnessing technology and our large data sets – a billion rows of data per day – alongside our supervisory judgement to tackle market abuse faster. 

More broadly, interoperability will be critical through this transition.  

We must avoid creating unnecessary fragmentation across technologies, settlement systems and jurisdictions. 

We also have to face into a world where traditional exchanges sit alongside on-chain and decentralised platforms with highly diffuse operating structures.  

The registered entity, protocol governance, validators, sequencers, developers, and front-end interfaces may each be located in different jurisdictions.  

This makes it much more challenging to determine where critical market functions are actually performed, and which regulator has responsibility for them, if any. 

We are ready to consider how we flex our regulatory regimes to ensure they are digitally fit. And to lead reforms of major global markets.   

Just this month, we sought views on gold tokenisation.  

Something it feels ironic to be talking about, above the basement vault[2] that stood in for Fort Knox in the Bond film Goldfinger! 

Unlike Mr Goldfinger, we’re not looking to corner the gold market. But we do share his interest in the logistics… 

We want to understand whether, and under what conditions, tokenisation could improve the way gold is traded, mobilised, pledged and held, while maintaining high standards of market integrity.  

We recognise that there are important policy questions to answer – on regulatory classification, investors’ rights, custody and redemption, and what are appropriate consumer protections.  

But it has never been our job to pick winners or pre-determine outcomes. 

Markets develop through experimentation and healthy competition. Our aim is a dynamic, competitive market that accommodates different business models. 

A market where both established and digital-native firms can innovate, compete and interact on a level playing field…

… held to consistent expectations on market integrity, resilience and consumer protection.

Conclusion

So it’s a deceptively simply-sounding challenge: 

How do we create the conditions for adoption at scale – moving quickly enough to remain competitive, while maintaining the trust that underpins successful markets? 

I won’t pretend the FCA has all the answers. The picture is changing fast, and we’re all learning together as the technology, market, and use cases evolve. 

What I can say, is the FCA is up for it.  

Agile, ready to experiment and adapt. 

Humble enough to listen, and willing to challenge our own assumptions and approaches. Including cases where markets are evolving outside the scope of existing regulation.   

What gives me confidence is the momentum we're already seeing, through the combined efforts of government, regulators, market infrastructure providers, investors, and firms. 

If we can maintain that, the UK is well placed not only to keep pace with change, but to genuinely help shape the future of global capital markets.