BNP Paribas Asset Management announced the launch of natively tokenized money market fund (MMF) shares, testing cross-border transactions based on distributed ledger technology (DLT) with Allfunds Blockchain as tech provider and BNP Paribas’ Securities Services business as transfer agent and fund dealing services provider. The move follows the 2024 Eurosystem wholesale central bank digital currency (CBDC) experimentations.
By issuing a native tokenized share class of an existing money market fund in Luxembourg, BNPP AM is leveraging the fund’s tracking history and processing cross-border transactions with a French counterparty. The primary objective of this pioneering project is to use the blockchain-based system to enhance operational efficiency and provide real-time information on subscriptions and redemptions.
Specifically, having the shares natively tokenized will enable on-chain instantaneous order execution based on the NAV receipt instead of batch driven order execution. It will also enable faster and more efficient settlements for clients, as previously achieved within the Eurosystem experimentations.
Blockchain can enable the distribution of money market funds beyond institutional investors, making them accessible to a broader retail investor base. MMFs offer high liquidity and allow investors to access their funds according to their financing needs, while DLT adds increased efficiency and security.
Thibault Malin, deputy CIO of Money Market Funds at BNP Paribas Asset Management, said in a statement: “Tokenized MMFs and digital cash solutions, such as wholesale central bank digital currencies (CBDCs), are crucial in providing our clients with the most effective and efficient business solutions. By leveraging these innovative technologies, we can streamline processes and enhance the overall client experience. At BNP Paribas Asset Management, we are committed to staying at the forefront of financial innovation, embracing cutting-edge technologies that enable us to deliver tailored solutions to our clients and address their evolving needs in a rapidly changing financial landscape.”
Paul Daly, head of Distribution Products & Solutions for Securities Services at BNP Paribas, said in a statement: “This project allowed us to gain valuable insights into the distinction between digital representation of a traditional fund share and a native token, that is an imperative step to move to more impactful benefit. Moreover, tokenization of MMFs gains attention for their potential to broaden distribution with a wider investor base and offer enhanced liquidity through direct trading and instant settlement. It is with this in mind that we are proud to further strengthen our foundation to provide services on security tokens, to our clients, in line with our ambition to provide a seamless aggregated model across traditional and tokenized assets”.
Ruben Nieto, managing director of Allfunds Blockchain, said in a statement: “Our blockchain platform has once again demonstrated its versatility and reliability in handling diverse applications and ensuring secure transactions. Native tokenization of MMFs will allow to fully digitize the lifecycle of those products for which investors and asset managers alike are demanding shorter timeframe and more reactivity especially in the order placement and execution.”