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The $340 Million Case for Tokenized Collateral: What Industry Steps Are Needed for Adoption

Collateral operations are mission-critical—but manual processes, corrective buffers and settlement failures are creating costly post-trade frictions. A new global report from Nasdaq and the ValueExchange surveys firms on their tokenization plans, the impact to capital efficiency, the realities of institutionalization and how the industry can move forward.

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The Hidden Collateral Tax

Our global survey examined collateral operations across investment banks, custodians, prime brokers, asset managers and CCPs to assess current challenges and tokenization readiness.

The research reveals that 52% of firms expect to manage live tokenized collateral by the end of 2026. Today, however, 70% of respondents report settlement matching and delivery issues daily, reflecting the reliance on manual processes that continue to challenge efficiency.

Industry workarounds are common: 35% of firms post more than half their collateral overnight to ensure timely delivery, while the average firm maintains approximately 7% excess collateral as a buffer against potential failures.

These corrective behaviors mean roughly 25% of total collateral usage earns no returns for the owner. That’s led to a focus on collateral tokenization, which can address uncertainty and enable firms to reduce buffers and mobilize previously idle assets. Tier 1 firms, who in our research hold roughly $36.8 billion in excess or non-remunerated collateral, can leverage tokenization to achieve an annual interest earning increase of $346 million, with smaller firms gaining anywhere between $7 million and $190 million.

Highlights from the Collateral Tokenization Survey

Visualize the key findings around tokenization plans, expected benefits, early movers and the industry's path forward.

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Who Did We Survey?

We spoke to 203 market participants across North America (15%), Europe (26%), Middle East/Africa (20%) and Asia-Pacific (15%). The quantitative findings were supplemented by 50+ hours of interviews with collateral specialists, treasury leaders and industry working groups.

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Quantifying the Collateral Landscape

The research turned up notable insights including:
30% Repos Share who rank repos as the highest-priority use case for tokenization, followed by OTC and listed derivatives.
78% North America Share of respondents who expect significant business impact from tokenization, outpacing EMEA and APAC respondents.
70% CDM Share who see the Common Domain Model as foundation for cross-chain connectivity.
57% OTC costs Share of total trade costs attributable to OTC operating costs.

AI and Tokenization: Driving Collateral Mobility, Market Efficiency and Digital Integration

Sophie Marnhier-Foy, Nasdaq's Head of Digital Asset Solutions, talks about how innovations including AI and tokenization can unlock new opportunities across capital markets operations. 
Tokenization is all about reducing the friction in the trade.
COO, Global Prime Brokerage
Tokenization means 120 more hours in each week.
Head of Trading, Tier 1 Investor
Making the Case for Tokenized Collateral What industry steps will it take to realize the benefits of tokenization? Download the Report

Tokenization Domino Effect

Our research found tokenization could eliminate 1 in 8 failed trades, potentially creating a virtuous domino effect felt across collateral operations:

12%

Operating cost reduction through fewer exceptions and reduced manual reconciliation.

12%

Decrease in collateral buffering as certainty reduces overcollateralization.

8%

Improvement in RWA costs by converting FOP transactions to DVP movements.

3%

Collateral utilization improvement by mobilizing assets that currently sit idle.
What Are the Barriers to Adoption? Survey respondents identified significant implementation considerations. Project costs averaged $2 million in 2025—potentially consuming up to one-third of revenue upside for smaller firms. Network connectivity fees of approximately 2 basis points per chain become prohibitive for multi-chain connectivity. System duplication remains unavoidable, as few traditional platforms process digital assets natively. Moving to 24/7 margining requires expanded staffing coverage that regional institutions find cost-prohibitive.

Tomorrow's Headlines

TMMF Use Case Grows

Over 60% of North American and European respondents anticipate tokenized money market funds becoming eligible collateral by 2026.

Market Infrastructure Adapts

Regulatory clarity, legal definitions and CSD-level tokenization will be central to controlled and compliant adoption.

Institutionalization Path

Large institutions are beginning with intra-entity flows to establish technology foundations before external counterparty deployment.

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