Matteo Andreetto, head of SPDR EMEA at State Street Global Advisors (SSGA), has said the ability to fractionalise and digitise ETFs and private assets through tokenisation “will be game-changing” and something the firm “will be looking at”.
Speaking at ETF Stream’s ETF Ecosystem Unwrapped 2023, Andreetto said tokenisation is the next evolution facilitated by blockchain and the digitalisation of assets, with potential applications in ETFs and private assets representing “extremely interesting developments”.
“We will be looking at the tokenisation of ETFs,” he continued. “And then the tokenisation of private assets. That for me will be game-changing.
“From our perspective, clients would love to have SPDR digital asset classes or SPDR tokenised ETFs. Considering how vast our platform is, we know we have to look at it - in partnership with our custodians at State Street bank.”
Andreetto revealed in 2021 his firm was monitoring the crypto landscape and had “more and more investors asking about the space”, however, he indicated a decisive move into exchange-traded products (ETPs) is not in SSGA’s immediate plans.
“We are clearly not after launching 20 crypto ETPs. We are not in that business but clearly the private market being tokenised and even ETFs is something that will change the industry once it becomes available.
“The technology is developing very fast and talking to State Street bank, this is something that sits at the top of their agenda.”
Andreetto’s comments come half a year after BlackRock founder, chairman and CEO Larry Fink told shareholders tokenisation would be the “next generation for securities”.
In February, Swiss structured product specialist Backed Finance launched the Backed CSPX Core S&P 500 (bCSPX), the first time a Europe-listed ETF has been wrapped in an ERC-20 token structure.
DWS and others have tokenisation in focus
Sam Manchanda, head of passive client coverage for North EMEA at DWS, told ETF Ecosystem Unwrapped 2023 attendees to “watch this space for later this year” regarding his firm’s crypto plans following a recent ‘strategic alliance’ with digital asset manager Galaxy. DWS has also been vocal about its interest in tokenising assets.
“Tokenisation is an area the asset management industry is interesting in, such as in the alternatives space,” Manchanda said. “It is in an early stage but we know there are various parts of the market that have looked at this.
“We have got to take the time to figure out what are the right end solutions that clients want and whether or not there is a rationale for it.”
Previously, DWS’s global head of capital markets Keshava Shastry told ETF Stream version one of tokenisation in Europe would look at getting the ‘pipework’ and custody in working order.
“Baby steps are being taken to understand the implications and tokenising ETFs is one of the easiest ways to do it because it is already a listed security, already quite efficient and trades at a different time to the underlying,” he said.
“Tokens might trade 24 hours a day but ETFs also trade, for instance, when the US underlying is closed on President’s Day or Chinese securities when the market is closed for a week during Chinese New Year.
“Tokenisation is just pushing the boundaries to the next step and making it more operationally efficient because it is T+0 settlement and 24/7 trading.”
In April, DWS CEO Stefan Hoops said “the majority of crypto coins are between worthless and fraudulent” but argued tokenised assets could prove transformative.
His comments accompanied the DWS board publishing its core beliefs on crypto, where the German asset manager argued tokenisation will “become more material than cryptocurrencies”.
Delving into the technology looks to be the next area of interest for asset managers across the board. Outside of SSGA, BlackRock and DWS, Franklin Templeton’s head of distribution EMEA Caroline Baron said at ETF Ecosystem Unwrapped 2023 the firm is also looking at tokenisation.
“Our CEO Jenny Johnson is very keen on this area of the market,” she said. “We have the first tokenised money market fund. Watch this space.”
