GDF TMMF Collateral Working Group
Problem Statement
"How can Tokenized Money Funds be used in Derivatives Margin?"
A dedicated Working Group (WG) established to explore the potential of Tokenized Money Market
Funds (TMMFs) as eligible collateral for derivatives margin.
The WG will focus on assessing market potential, defining key criteria, identifying use cases, testing
use cases and engaging with regulators and industry bodies (if needed) to create a robust framework for adoption.
The WG will primarily focus on the application of TMMFs in Bilateral Variation Margin transactions
under ISDA/CSA agreements governed by UK or EU laws. The initial analysis will center on
derivatives counterparties operating within these jurisdictions.
Additionally, the project will:
● Examine eligibility criteria for TMMFs as collateral, considering liquidity, valuation
transparency, and regulatory compliance.
● Investigate the re-usability of TMMFs with Central Counterparties (CCPs) and triparty
arrangements.
● Evaluate opportunities for integration into broader collateral frameworks, including Initial
Margin, and explore applications beyond ISDA/CSA agreements in future phases.
● Explore operational feasibility, including settlement timing, custody solutions, and
interoperability with both legacy financial systems and blockchain networks.
● Develop interoperability protocols to facilitate the seamless movement of ownership and
rehypothecation rights for TMMFs, ensuring alignment with both digital and traditional asset
management practices and reporting.
● Assess scalability and the potential for aligning collateral practices with global jurisdictions to
support harmonized regulatory and operational frameworks.
● Examine re-use under US regulations and law, with US counterparties.
The scope aims to address these objectives while fostering innovation, enhancing efficiency, and
ensuring regulatory compliance for the adoption of TMMF in derivatives markets.
REPORT:
