Tokenovate launches Novat Protocol for instant T+0 settlement

Tokenovate has launched the Novat Protocol, a programmable settlement solution designed to deliver instant, atomic, and legally final settlement for tokenised assets in capital markets. The protocol aims to address persistent inefficiencies in global post-trade operations, where liquidity remains locked due to fragmented processes and outdated technology.

Settlement timelines

The transition to T+1 settlement in the UK and the European Union, scheduled for October 2027, is expected to accelerate post-trade processes from days to hours. However, industry analysis suggests that even this adjustment will not fully resolve systemic risks or alleviate the underlying structural complexities. Research indicates that moving to T+0 settlement, where trades settle instantly, could reduce exposure during stress events by up to 80% compared to T+2.

Protocol functions

The Novat Protocol operates by synchronising asset and cash movements using automation and a unified legal framework. Built atop the FINOS Common Domain Model (CDM), the industry's open-source standard for representing financial products and events, it integrates legal contracts, trade data, and settlement processes within a single programmable layer. This structure is designed to allow for instantaneous settlement without requiring significant changes to existing regulatory or custodial arrangements.

The system tokenises the act of settlement itself, distinguishing it from other tokenisation efforts that focus primarily on digitising assets. Its data-driven approach enables every on-chain transaction to reflect a defined contractual obligation, combining legal certainty with operational automation.

Compatibility focus

According to Tokenovate, Novat is designed to integrate with established regulatory and custodial frameworks. This approach aims to provide a feasible path towards T+0 efficiency, enabling firms to unlock liquidity that legacy post-trade systems would otherwise delay. The protocol has also been developed in collaboration with industry groups, including ISDA and FINOS, to ensure wide-ranging compatibility.

"The move to T+1 in 2027 is progress, but it's not the finish line. Markets can't afford to wait two years, or two days, for liquidity to move. The Novat delivers what comes next: instant, atomic, and legally final settlement that releases liquidity the moment a trade completes and slashes operational risk. Crucially, it works within the system. It's fully compatible with today's custodial and regulatory frameworks. As markets get even faster, only solutions that combine legal certainty, settlement finality, and liquidity optimisation will define the next era of efficiency and trust in global finance," said Richard Baker, CEO, Tokenovate.

Legal and technical standards

The Novat Protocol's implementation of the CDM standard aims to bridge the legal, technical, and operational gaps that often slow down traditional settlement processes. This focus on aligning data, logic, and legal records provides for deterministic and transparent settlement operations. Tokenovate states that its automation engine transforms market standards into executable programmes, allowing settlement to occur reliably and transparently.

"Tokenised settlement requires more than faster technology. It requires a shared legal and data standard. The Novat Protocol provides that foundation, translating contractual obligations into executable logic while preserving the custodial and legal frameworks that underpin market trust. It acts not as a parallel infrastructure but as a synchronisation layer, bridging legal, operational, and technical domains so that settlement can occur deterministically, with the same certainty in law as in code," said Ciarán McGonagle, Chief Legal & Product Officer, Tokenovate.

Industry reception

Stuart Davis, Global Co-Chair of FinTech at Latham & Watkins, added: "The Novat Protocol is an innovative bridge between traditional financial infrastructures and tokenised settlement that is designed to marry the concept of trusted atomic settlement with the existing custodial systems for recording the ownership and transfer of assets, unlocking otherwise trapped liquidity and reducing settlement exposure. Congratulations to the Tokenovate team on the launch of a groundbreaking protocol."