How Nasdaq is Turning Tokenized Collateral into Operating Reality on the Canton Network with Vanguard and Wellington Management
Key Takeaways
- Test tokenized collateral trades completed on Canton Network
- Nasdaq Calypso supported the full collateral workflow
- Tokenized MMF shares worked within existing frameworks
- A step toward always-on institutional market infrastructure.
The collateral management challenge facing financial institutions is well understood. Aging infrastructure platforms built for a different era — characterized by fragmentation, manual processes, and high frictional costs — continue to constrain the movement of capital in ways that impose real costs on firms every day. Nasdaq research puts a number on it: 25% of collateral is currently tied up in corrective and non-interest-bearing measures, with the average tier 1 bank holding over $35 billion in idle capital.
This represents an extraordinary amount of capital that could be redeployed, risk that could be reduced, and operational complexity that could be eliminated. Tokenizing collateral and the use of distributed ledger technology are a significant unlock for the industry, but market leaders have needed clear proof that tokenized collateral can operate within the same institutional workflows and with the same confidence that markets demand. Nasdaq has now taken another important step toward making that a reality.
I am pleased to share that two of the world’s leading asset managers, Vanguard and Wellington Management, have successfully completed their first tokenized collateral trades on the Canton Network. The test trades demonstrated how Nasdaq Calypso can connect, post, and accept tokenized assets as eligible collateral alongside existing pools.
The entire workflow, from eligibility determination and margin call generation through to on-chain transfer and post-trade reconciliation, operated within Calypso's existing front-to-back environment, with no manual intervention required at the point of settlement. Crucially, it was conducted within existing operational frameworks, with the same security and integrity that institutional markets require, and at the scale that makes it meaningful.
Nasdaq Calypso: Tokenized Collateral Trades on the Canton Network
Money market fund (MMF) securities were tokenized using Nasdaq technology and issued as digital tokens on the Canton Network, a privacy-enabled blockchain built by Digital Asset. Each token represents a direct, legally enforceable interest in the underlying fund shares. To support this, the agreements that govern the bilateral relationships between the parties were amended, through targeted updates rather than wholesale rewrites, to recognize tokenized MMF shares as eligible collateral, consistent with the approach recommended by the International Swaps and Derivatives Association.
Standard margin calls were generated within Nasdaq Calypso, with the platform's collateral management workflows extended to recognize the tokens as eligible instruments. The collateral movement was executed entirely on-chain: the pledging party transferred tokens from their Canton Network wallet to the secured party's wallet, with settlement finality occurring in real time and each firm's collateral inventory updated automatically within Calypso.
From the perspective of the firms involved, digital assets were treated as part of a single, unified collateral pool, mobilized in the same way as any other instrument, at any time, without the constraints of legacy asset workflows.
The technology is built to accept tokenized securities regardless of the platform on which they were issued, expanding the eligible collateral universe across the financial services ecosystem. Ultimately, it offers a clear and open path for other institutions, other asset classes, and other tokenization platforms to connect to this infrastructure.
Advancing Nasdaq’s Always-On Strategy
This initiative builds on Nasdaq's longstanding investments in digital assets and market modernization, bringing together liquidity platforms, tokenization capabilities, and a portfolio of financial technology solutions serving the digital assets ecosystem. As with the recent announcement of our definitive agreement to acquire LeveL Markets, we are advancing toward the programmable, always-on market infrastructure of the future.
In this case, we are integrating tokenized securities into established collateral workflows in a way that is built for institutional scale, collaborating with buy-side firms, Calypso clients, and the wider industry to scale tokenized collateral.
Set against broader industry momentum, such as the landmark on-chain U.S. Treasury financing and tokenization efforts led by the DTCC, these initiatives represent an integrated approach to advancing collateral mobility and optimization across the institutional ecosystem. Together they are drawing more participants onto shared infrastructure and building toward a market in which tokenized collateral operates alongside established asset classes as a matter of course.
The industry is at an inflection point. We are establishing the infrastructure and partnerships to move the ecosystem forward, and these transactions demonstrate that the institutional market is ready to move with us.
Cautionary Note Regarding Forward-Looking Statements:
Information set forth in this press release contains forward-looking statements that involve a number of risks and uncertainties. Nasdaq cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Forward-looking statements can be identified by words such as “can” and other words and terms of similar meaning. Such forward-looking statements include, but are not limited to, statements related to the benefits of Nasdaq Calypso’s platform for tokenized collateral trading. Forward-looking statements involve a number of risks, uncertainties or other factors beyond Nasdaq’s control. These risks and uncertainties are detailed in Nasdaq’s filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q which are available on Nasdaq’s investor relations website at http://ir.nasdaq.com and the SEC’s website at www.sec.gov. Nasdaq undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
Information set forth in this post contains forward-looking statements. Nasdaq cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ from those contained in the forward-looking information. Forward-looking statements can be identified by words such as “will,” “believe” and other words and terms of similar meaning. Forward-looking statements involve a number of risks, uncertainties or other factors beyond Nasdaq’s control. Nasdaq Eqlipse, Nasdaq Trade Surveillance, Nasdaq Market Surveillance, Nasdaq AxiomSL and Nasdaq Calypso are products of Nasdaq’s Financial Technology business and is operationally independent and distinct from The Nasdaq Stock Market, LLC.
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