Schroders has obtained approval from the Central Bank of Ireland for a tokenised share class in a US dollar money market fund, its first launch of this type.
The share class, Schroders onchain active returns (SOAR), is intended to address client interest in digital asset products and more efficient fund operations, noted the firm.
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Using Kinexys by J.P. Morgan’s multi-chain tokenisation system, investors will be able to use smart contracts to process transactions such as redemptions and transfers.
These are blockchain-based programmes that carry out actions automatically once pre-set conditions are satisfied.
Kinexys by J.P. Morgan market development global head Kara Kennedy said: “Tokenised financial infrastructure is no longer theoretical; it’s restructuring liquidity, settlement and digital asset workflows at increasing speed. As demand for tokenised assets grows, tokenised money market funds can help meet investor needs while introducing new features enabled by blockchain technology.”
Schroders said the structure would allow the money market fund to move more easily outside conventional systems, including transfers between its clients.
It also pointed to possible later uses such as collateralisation and round-the-clock treasury and liquidity management.
The authorisation comes after Schroders Capital earlier this year introduced a tokenised feature to its insurance-linked securities investment platform.
The group has also played a role in the Guardian Asset and Wealth management industry working group, alongside the Monetary Authority of Singapore, in efforts to develop standards for digital assets with regulators and market participants.
The Ireland-domiciled fund will be managed with input from Neil Sutherland, head of US fixed income and portfolio manager at Schroders, together with credit specialists.
Kinexys by J.P. Morgan, part of J.P. Morgan Payments, connects blockchain activity with the fund’s transfer agent.
Schroders CFO Meagen Burnett said: “For more than two centuries we have navigated social, economic and technological change to deliver excellent long-term investment outcomes for our clients.
“By combining money market investments with the benefits of distributed ledger technology, we are offering investors a new level of access, efficiency and security. This milestone is a testament to our commitment to developing world-class solutions that meet the evolving needs of investors in the digital age, and is a pivotal step forward for Schroders, as we move towards our vision of delivering a composable finance ecosystem for our clients.”
