L&G Asset Management launches tokenised liquidity funds

Legal & General Asset Management has made its liquidity funds available on SS&C's Calastone Tokenised Distribution Network, adding tokenised access to a range of funds that manage more than £50 billion in liquidity assets.

Investors can now access the strategies in tokenised form through blockchain-based infrastructure, while the funds remain available through existing channels. The tokenised share classes are being offered first on Ethereum and other EVM-compatible blockchains.

Calastone, owned by SS&C Technologies, provides the technology for token creation, order routing, trade aggregation, reconciliation and on-chain settlement. The network is designed to connect traditional fund products with digital distribution channels and integrate with existing fund administration, settlement and transfer agency systems.

The arrangement allows authorised users to buy, hold and transfer tokens within a permissioned framework. It is intended to broaden distribution without changing access for investors who continue to use traditional fund routes.

Digital shift

The launch marks another step by a large mainstream asset manager into tokenised fund distribution, an area drawing growing attention across financial markets as firms test whether blockchain-based records can reduce friction in trading and servicing investment products. Rather than creating new standalone digital assets, firms have increasingly focused on wrapping existing regulated funds in tokenised formats that can sit alongside established operations.

For L&G, the immediate focus is its liquidity fund range within Global Markets. The funds are available in US dollars, euros and sterling, and are aimed at investors seeking capital preservation, same-day settlement and yield on short-term cash holdings.

L&G has run liquidity funds for decades. It manages about £1.2 trillion in total assets across its asset management business, with roughly 43% held internationally.

Operational fit

A central question for fund groups exploring tokenisation has been whether new digital formats can be introduced without rebuilding the rest of their operating model. L&G and Calastone say the tokenised structure has been built to work with current administration and settlement processes, reducing the need for separate infrastructure.

That reflects a wider pattern in the market, where established asset managers and service providers have positioned tokenisation as an overlay to existing fund structures rather than a replacement. The use of permissioned access also highlights the emphasis large institutions place on operating within regulated frameworks as they test digital distribution models.

Calastone already has a large footprint in fund connectivity, serving 4,500 clients across 58 countries and territories and processing more than £250 billion in investment value each month.

Investor access

L&G says tokenisation could help it reach digital investor segments and respond to demand for more efficient access. In practice, investors using blockchain-enabled infrastructure can gain exposure to the same underlying fund strategies through tokenised units. In contrast, firms handling the funds can use automated routing, reconciliation and settlement processes.

The tokenised versions are initially limited to a set of blockchain networks, with additional chains expected to be added over time. This suggests the group is aiming to keep the format adaptable as market preferences and infrastructure standards evolve.

"We are thrilled to make our liquidity funds available on the Calastone Tokenised Distribution Network. This launch represents another important step in our digital asset journey as we continue to expand the ways investors can access our strategies. Tokenised distribution provides meaningful enhancements in efficiency and reach, and we are excited to partner with Calastone as we accelerate innovation across our liquidity franchise," Ross McDonald, Liquidity Investment Specialist, L&G, said.

Simon Keefe, Head of Digital Solutions, Calastone, said: "We are pleased to partner with L&G to make their liquidity funds available on SS&C's Calastone Tokenised Distribution Network. This launch demonstrates how tokenisation can be applied to established fund structures to enhance distribution, improve efficiency and broaden access within a controlled, regulated framework. We look forward to supporting L&G as they continue to expand their digital distribution capabilities."