Beatrice Fares, former DG FISMA director, and Peter Kerstens, adviser at the European Commission, discussed the impact of tokenization on financial markets. They noted that tokenization combines trading, clearing, and settlement into a single step using shared ledgers and smart contracts.
Atomic settlement, where asset exchange and payment occur simultaneously, removes current settlement delays. This shift requires institutions to pre-finance trades instead of post-financing them, potentially creating liquidity pressures during market stress.
Network effects are expected to persist on blockchain infrastructure, favoring platforms that attract major banks and custodians. Established providers like Euroclear and Clearstream are already adapting by developing common data standards.
Regulatory challenges arise from the overlap between the Markets in Crypto-Assets Regulation (MiCA) and traditional securities regimes. These barriers may increase compliance costs and favor larger institutions with significant legal resources.
Tokenization could potentially connect 27 fragmented national capital markets in Europe. However, experts suggest that the future of market infrastructure depends on market design, liquidity provision, and access control rather than transaction speed alone.
