Bank of England Seeks Feedback on Tokenized Collateral for CCPs

The Bank of England has opened a consultation on draft guidance for UK central counterparties considering tokenized collateral. The proposal describes how clearinghouses should assess tokenized forms of assets currently eligible under the proposed UK CCP Rulebook before accepting them. The consultation was published Thursday, Oct. 29, and responses are due Feb. 12, 2027. Government bonds are among the assets considered in tokenized form. The draft focuses on how existing collateral standards apply when an asset is represented and transferred as a token. Central counterparties (CCPs) stand between parties in cleared trades and collect collateral to manage counterparty risk.