Tokenovate joins Bank of England RTGS sync project

Tokenovate has been selected to take part in the Bank of England's Synchronisation Lab, a project exploring how synchronised payments through the central bank's Real-Time Gross Settlement (RTGS) service could shape future wholesale market infrastructure.

The UK-based fintech is one of 18 participants from across the financial sector. The lab examines potential use cases and business models for payment "synchronisation", which involves coordinating the movement of cash and assets across systems.

The programme focuses on wholesale markets rather than retail payments. It is looking at how synchronised payments could support more automated settlement and processes linked to complex products, including derivatives and collateral workflows.

Synchronised payments are payment flows coordinated with other events, such as an asset transfer. In wholesale markets, that coordination often relies on multiple intermediaries and message formats. The Bank's work explores whether a future synchronisation capability linked to RTGS could reduce manual steps and the need for separate reconciliation processes.

Wholesale plumbing

The project centres on the mechanics of post-trade processing. Participants are exploring standardised payment and settlement instructions, programmable lifecycle events, and conditional asset transfers. The aim is to understand how these elements could be coordinated within existing market infrastructure, rather than replacing current systems.

In derivatives and collateral management, a single trade can trigger multiple events over its lifetime, including margin calls, substitutions, partial terminations and cashflow settlements. These events can span different systems for trade processing, collateral, custody and payments. A synchronised approach could change how firms manage timing and settlement risk across those linked processes.

The Synchronisation Lab sits within the Bank of England's wider work on upgrading RTGS and promoting innovation in wholesale settlement. The central bank expects the programme to generate insights that inform design decisions as it develops its thinking on synchronisation.

Tokenovate's contribution draws on its work in tokenised settlement and post-trade lifecycle automation. It also plans to share its experience of multilateral orchestration for workflows where several parties need to act in a coordinated way.

Novat protocol

The participation follows Tokenovate's recent launch of a programmable settlement protocol called Novat. The firm describes Novat as a protocol for tokenised assets designed for instant, atomic and legally final settlement.

Tokenisation and programmable settlement have attracted interest as market participants look to shorten settlement cycles, cut operational risk and free up liquidity tied up in margining and settlement buffers. These efforts are also unfolding alongside changes to settlement timing in Europe.

The UK and EU are moving to a T+1 settlement cycle by October 2027. A shorter cycle puts more pressure on post-trade processes by reducing the time available to resolve exceptions, move collateral and complete cash movements. Firms are reviewing their operations and technology stacks in response.

Tokenovate positions its work as operating alongside existing RTGS and custodial infrastructure. That reflects the reality that wholesale markets rely on a mix of central bank money settlement, commercial bank money, custodians and central securities depositories. Any change to settlement workflows needs to function across that environment.

Richard Baker, CEO and founder of Tokenovate, said: "The Synchronisation Lab provides a valuable opportunity to test ideas in a collaborative environment alongside the Bank of England and other participants.

"We will bring our experience and insights to exploratory work examining how settlement could become more programmable and tokenised, while continuing to operate alongside existing custodial and RTGS infrastructures over the coming months of the project."

Legal design is also a focus for firms working on tokenised settlement. Wholesale settlement requires clear rules around finality and enforceability, and raises questions about how tokenised representations of assets interact with existing legal frameworks and market conventions.

Ciarán McGonagle, Tokenovate's chief legal and product officer, linked those issues to market structure and operational fragmentation.

"Settlement is where the underlying fragmentation of otherwise digital markets is most clearly exposed. The Synchronisation Lab is an important step in exploring how asset and cash movements can be coordinated across systems in a legally robust way.

"Our contribution focuses on how programmable settlement logic, grounded in the FINOS Common Domain Model, can sit alongside existing RTGS and custodial infrastructure to support more automated, multilateral workflows for derivatives and collateral, without disrupting settlement finality."

The Synchronisation Lab is a research and exploration programme rather than a deployment of live services. Participants' work is expected to feed into the Bank of England's assessment of options for a future synchronisation capability connected to RTGS.