ESMA asks if tokenised collateral can work in EU clearing

ESMA has opened a call for evidence on tokenised collateral at EU clearing houses, asking whether it can be used safely when a clearing member fails. The EU markets regulator announced the review on 9 October, saying it wants to understand how tokenisation could affect collateral from transfer to use; see ESMA’s announcement of the call.

What kinds of tokenised collateral is ESMA examining?

ESMA is looking at digital versions of assets held in traditional systems, assets issued directly on distributed ledgers, and hybrid arrangements. A distributed ledger is a shared digital record of transactions. The review also asks how these models might connect with tokenised cash and other settlement assets.

Central counterparties, or CCPs, stand between buyers and sellers in trades and manage the risk if one side defaults. They require collateral to cover that risk. ESMA says tokenisation may change how collateral is transferred, managed, protected and used through its lifecycle. It is also seeking views on whether putting already eligible collateral into tokenised form changes its risk.

What must the system handle if a member defaults?

ESMA wants evidence on whether a CCP could access tokenised collateral, transfer it and turn it into cash when needed, including during market stress and after a clearing member default. The regulator says collateral safeguards must remain: assets should be high quality, legally enforceable, highly liquid and operationally available.

The review also raises client protection, the separation of client assets, and certainty about when a settlement is final. These issues arise where distributed ledgers connect with traditional market infrastructure, according to ESMA. The call asks how tokenised arrangements work in practice; it does not announce a change to the rules or say that tokenised collateral is now approved for CCP use.

Who can respond, and when is the deadline?

ESMA invites input from CCPs, clearing members and their clients, market infrastructure firms, tokenisation and distributed-ledger providers, legal experts, industry groups and other relevant stakeholders. Responses are due by 15 January 2027, through the consultation on CCP collateral tokenisation.

ESMA says it will assess the feedback in the first quarter of 2027 and then decide on a course of action, which could include regulatory or supervisory work. Responses will be published after the call closes unless the respondent requests otherwise.

Sources and documents

• ESMA’s announcement of the call — esma.europa.eu
• consultation on CCP collateral tokenisation — esma.europa.eu