The Breaking Wave of Digitalisation

Introduction

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Digital platforms collapse transaction costs, enhance transparency, eliminate multiple intermediate processes and enable the near frictionless transfer of economic interests.   

These benefits are well recognised and virtually all medium to large corporations are implementing platform business models to manage suppliers, enhance customer engagement and improve internal communications.

Even with this large-scale adoption, digital platform use can only accelerate as AI-enabled and block-chain based technologies extend the reach, utility and application of the technology.   It is only a matter of time before digital platforms are as commonly used to address complex issues such as disease diagnosis and control as they are used to pay on-line invoices.

Within this wave of adoption is the digitalisation sub-set of tokenisation: digital assets representing a physical counterpart.  One illustration is issue of of 4,000 tokens representing ownership of Picasso’s 1964 masterpiece, Fillet au beret.   Numerous other tokenisation examples may be found, covering hotel ownership, carbon credits, sports contracts, agricultural produce, and the ownership of poems, songs and lyrics.

To date, all tokenisation issues have been asset specific, facilitated by a single-purpose implementation.

What is required is a general purpose tokenisation platform able to be easily adapted,  adopted and applied across all verticals.  This platform is Sencilio.

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Financial Services, Debt Receivables & Tokenisation - The Way of The Future

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Securitisation is the pooling of receivables against which pass through certificates or other forms of paper based evidence of fractional pool ownership are issued.

Currently this is a expensive, resource hungry, manually intense, paper based process, taking months to arrange, and requiring the engagement of up to a dozen agents and intermediaries to originate, distribute and manage the transaction both at issue and  throughout its life.  

Tokenisation automates most aspects of the securitisation process enabling improved transaction efficiency, enhanced market liquidity, and greater risk control to be introduced. This is achieved by leveraging the embedded functionality of both distributed ledger technology and smart contracts.  

DTL provides a transparent, immutable, and tamper-proof record of ownership transfer.  By so doing the services currently provided by the Reporting Agent, the Clearing and Settlement Agents, and the Registrar are rendered redundant.  DTL also implements T+Zero settlement cycles and by so doing, minimises counter-party risk, collapses margin holding requirements, reduces collateral holding requirements, and eliminates liquidity risk.  

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Smart contracts may be used to automate the calculation and distribution of complex, non-linear cashflows and by so doing eliminates the need for a Calculation and Paying Agent.  

Tokenisation also facilitates the disinter-mediation of Arrangers by introducing functionality whereby Originators can easily and rapidly assemble pools of receivables against precise investor requirements.  This enables Originators to work directly with Investors on the building and structuring of bespoke portfolios.

On-going management of portfolio pools may also be machine-enabled by introducing software to automatically identify and replace failing pool assets.  This contains a further layer of transaction overhead by automating the currently manually provisioned Asset / Collateral Management function.

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