Lloyds and Aberdeen leverage Hedera for regulated tokenized asset trades using Archax

Problem

The traditional collateral and margining process in FX and derivatives markets is operationally complex, slow, and cost-intensive—especially during periods of market stress. It relies heavily on manual processes, delayed settlements, and forced asset sales that can increase volatility and systemic risk.

Solution

Lloyds, Aberdeen, and Archax collaborated to pilot a regulated digital asset framework, using tokenized money market funds and UK gilts as collateral for FX trades. These tokens were issued and held on Hedera by Archax, a UK FCA-regulated digital asset exchange. The solution allows assets to be programmed and transferred on-chain in near real-time, reducing operational overhead, improving collateral mobility, and minimizing counterparty risk.

What separates Hedera is that it stands for many core values that align with ours—such as transparency, strong corporate governance, and sustainability. It’s also one of the lowest-consumption networks out there, which fits with our value of being a sustainable asset manager.

Allan Trimmer

Head of Product

UK first: Lloyds and Aberdeen leverage Hedera for regulated tokenized asset trades

In a world-first, Lloyds Banking Group, Aberdeen Investments, and Archax completed a landmark initiative using tokenized real-world assets (RWAs) as collateral for foreign exchange trades. In this groundbreaking collaboration, tokenized units of Aberdeen Investment’s money market fund (tMMF) and tokenized UK gilts served as collateral for FX trades between Aberdeen and Lloyds. The UK trades $5.4 trillion in FX and interest rate derivatives daily, accounting for half of global activity, making this demonstration particularly significant for the global financial markets.

Archax, the UK’s first FCA-regulated digital asset exchange and tokenization platform, issued, transferred, and securely held the digital tokens using the Hedera network. The solution leveraged Archax’s “Nest” permissioned DeFi collateral transfer network to enable seamless movement of tokenized assets as collateral. The implementation demonstrated that regulated digital assets can serve as collateral in this market, which is a significant milestone.

Why Hedera

Hedera technology enables the network to achieve a high throughput with rapid settlement, making it ideal for time-sensitive financial operations. Hedera’s unique governance framework delivers robust decentralization, unparalleled transparency, and trusted decision-making through its Council of leading institutions, providing the institutional-grade infrastructure required for regulated financial markets.