BNY and Citadel Securities have completed a transaction that uses a tokenized Treasury for overnight repo, settling within minutes on BNY's private digital ledger. Citadel Securities purchased a two-year Treasury note via Tradeweb, then used the tokenized asset as collateral in an overnight triparty repo. The transaction demonstrates the potential for faster collateral availability and connects digital settlement to traditional financing mechanisms.

The tokenized fixed income market has experienced remarkable expansion since early 2025, surging from $0.6 billion to $9 billion by late 2026. While Treasurys still dominate, non-Treasury tokenized assets now represent about 60% of the size of the tokenized Treasury market, reflecting increasing investor interest in diversified fixed income opportunities.

Vanguard has automated 70% of its trades, up from 40%, by categorizing trades into high-touch, low-touch and no-touch methods, says Stephanie Creswell, a fixed-income trader at Vanguard. However, speakers at FILS Europe warn that automation may create a knowledge gap between senior and junior traders and hinder market understanding.

European Central Bank President Christine Lagarde has indicated the European Stability Mechanism could soon issue a tokenized instrument through the Pontes platform, which was launched last month to facilitate the settlement of tokenized transactions in central bank money.

The Securities and Exchange Commission has proposed amendments to Rule 17a-7 that would allow affiliated funds to resume cross-trading most fixed-income securities, potentially reducing transaction costs. The proposal would require advisors to document that trades serve funds' best interests, while chief compliance officers would face quarterly reviews and annual backtesting requirements. The public comment period will run for 60 days following Federal Register publication.

The Securities and Exchange Commission is aligning with President Donald Trump's executive order by replacing "artificial intelligence" with "super intelligence" in all official documents. The SEC has already updated its website and renamed its AI task force to the SI Task Force. The Department of Justice and the Department of Labor are also complying with the order, which aims to reflect the advanced capabilities of current AI systems.

The International Monetary Fund's Global Financial Stability Report says tokenization can eliminate market frictions and intermediaries but also removes shock absorbers, potentially accelerating crises. The report notes that while tokenization offers benefits such as cheaper issuance and real-time settlement, many advantages stem from digitalization rather than blockchain. The IMF sees minimal systemic risk from tokenization due to its small market size.