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Unified custody
30 Sep 2026
As asset managers, servicers, and custodians grapple with the rapidly shifting market the persistent question remains: how can they keep up? Madison Hendrickson explores
Image: gorodenkoff/stock.adobe.com
The current sentiment across the sector is modernisation; and keeping pace is key to survival in the new, rapidly changing market. Custodians and banks are facing increasing numbers of hurdles: accelerated settlement, the rise of digital assets and tokenisation, as well as how to combat operational silos.
While it is too soon to concretely pick one method of addressing the change, unified custody models — a single framework for all types of securities to be held — could be the answer the industry needs.
The unified model
As the market begins embracing the shift from strictly traditional securities to also include crypto keys, digital assets, and the tokenisation of real-world assets (RWA), there is a need for an updated custody solution as most systems have been built around traditional structures.
Many firms are already addressing this need. Citi has launched Custody+; Standard Chartered appointed LMAX Group as its digital asset custodian; and Deutsche Bank also followed suit with plans for a digital asset custody solution to launch within the year.
The concern around addressing the new face of custody is not the custody or assets themselves, but rather the processes underneath; different asset types rely on different data models so unless the processes become consistent, the operational complexity will remain.
“Unified custody can give institutions a coherent view of assets held across traditional and digital assets,” says Richard Baker, CEO and founder of Tokenovate. “However, its success will depend on how far firms can simplify the processes sitting underneath the custody layer.”
Baker explains that the market will continue to use a mix of custodians, ledgers, and settlement rails. He says the focus should be on creating a common way for transitions to move across them.
Marco Kessler, head of Product and Business Development & Market Ecosystem, Custody, SIX, agrees.
“Rather than forcing everything onto one infrastructure, custodians need to connect different systems while providing clients with a common set of controls,” he says, expressing that the focus should be on interoperability in order to give financial institutions consistent ways to manage assets, collateral, and liquidity across different markets and technologies.
Digital complication
The expansion in asset types is, in part, adding to complication in custody. With the introduction and adoption of digital assets, tokenised RWAs, custody is no longer limited to just holding securities.
“We are moving towards a hybrid financial system where traditional securities, digitally native assets and tokenised real-world assets, and different forms of digital money coexist,” Kessler comments.
“Unified custody enables these assets to be fungible and interoperable across different ledgers and technology, traditional and digital, thus enabling ultimately cross-ledger settlement.”
According to Kessler, the role of unified custody aims to remove the burden of custodians to connect and directly operate the many new ledgers. For instance, in a delivery-versus-payment (DvP) setting, he describes that, through unified custody, the delivering party can operate in a traditional setting expecting payment through traditional means, and the purchasing party could pay using digital money and receive the purchased asset in their onchain wallet.
However, there are still several constraints to bridging legacy asset pools and digital liquidity.
Baker remarks that bridging the gap creates a data challenge because, “where a tokenised asset and its conventional equivalent are described differently, eligibility and ownership have to be re-established each time collateral moves”. He adds that shared standards like the Common Domain Model (CDM) allows both to be treated consistently.
Accelerated settlement
With the T+1 go-live date for the UK fast approaching, many firms are already planning ahead for real-time settlement. Despite this planning, there remain many operational hurdles that firms must clear, with added pressure on firms to remove manual touch-points.
According to a report put forth by Tokenovate, 83 per cent of UK post-trade professionals say their firms are prepared for the October 2027 deadline, but only 32 per cent describe operations as fully prepared today.
The report lists trapped liquidity as a material burden; 98 per cent of firms regard tied up capital as a result of slow or fragmented settlement, as a risk to their organisations.
Baker provides additional insight into these operational hurdles, stating that the biggest constraint is the coordination between cash, collateral, and securities. “Institutions can have sufficient liquidity overall while still struggling to mobilise it at the point of need because assets sit across different systems, become available at different times, and often require manual intervention before they can move,” he says.
The room to absorb delays is shrinking as settlement cycles shorten, Baker explains, and firms need a clearer view of where eligible assets are held and whether they can be mobilised in time to settle. Similarly, Kessler believes that knowing where assets are and if they can be used is a key part of what must be addressed, suggesting the ability to move assets quickly between digital and traditional environments is another key challenge.
“Ultimatley, real-time settlement needs to be matched by much more effective intraday liquidity management, supported by interoperable infrastructure, and clear rules,” says Kessler.
Different treatment for different assets
Unsurprisingly, regulatory frameworks surrounding the evolution of securities and assets are continually updated to ensure safety and security of the assets as the landscape continually shifts. This does not mean that assets will be handled in the same way within a unified custody framework.
“Different assets will continue to have different legal and safekeeping requirements,” Kessler expressed. “The challenge is to preserve those protections and segregation requirements underneath a consistent client experience.”
Baker concurs, explaining that a unified custody model needs to preserve legal and operational controls attached to each asset. “As the range of instruments expands, custodians need to be able to show clearly who owns an asset, how it is segregated, which contractual rights apply, and when settlement has become final.”
Both Baker and Kessler implore that regulatory clarity and transparency are vital, as distinctions and ownership must remain visible throughout the process.
Forward looking
The development of custody is still in early stages, as is much of the rest of the sector. Nothing will happen instantaneously and, looking forward, unified custody will likely play a role in how the market shifts.
Kessler believes the lines between traditional and digital infrastructure should become increasingly blurred, and anticipated greater connectivity between existing securities, infrastructure, and blockchain-based networks.
“Unified custody will certainly be part of that evolution,” he states, “but regulated interoperability is the critical ingredient.”
Baker also believes the market will increasingly become more hybrid with traditional and modern infrastructure operating alongside each other.
“Unified custody is likely to develop alongside this, particularly as clients look for a more coherent view of assets held across different environments.”
Ultimately, the roadmap forward is still unfinished but ensuring interoperability, regulatory clarity, and certainty in asset location and availability will be key in development — something unified custody aims to accomplish.
While it is too soon to concretely pick one method of addressing the change, unified custody models — a single framework for all types of securities to be held — could be the answer the industry needs.
The unified model
As the market begins embracing the shift from strictly traditional securities to also include crypto keys, digital assets, and the tokenisation of real-world assets (RWA), there is a need for an updated custody solution as most systems have been built around traditional structures.
Many firms are already addressing this need. Citi has launched Custody+; Standard Chartered appointed LMAX Group as its digital asset custodian; and Deutsche Bank also followed suit with plans for a digital asset custody solution to launch within the year.
The concern around addressing the new face of custody is not the custody or assets themselves, but rather the processes underneath; different asset types rely on different data models so unless the processes become consistent, the operational complexity will remain.
“Unified custody can give institutions a coherent view of assets held across traditional and digital assets,” says Richard Baker, CEO and founder of Tokenovate. “However, its success will depend on how far firms can simplify the processes sitting underneath the custody layer.”
Baker explains that the market will continue to use a mix of custodians, ledgers, and settlement rails. He says the focus should be on creating a common way for transitions to move across them.
Marco Kessler, head of Product and Business Development & Market Ecosystem, Custody, SIX, agrees.
“Rather than forcing everything onto one infrastructure, custodians need to connect different systems while providing clients with a common set of controls,” he says, expressing that the focus should be on interoperability in order to give financial institutions consistent ways to manage assets, collateral, and liquidity across different markets and technologies.
Digital complication
The expansion in asset types is, in part, adding to complication in custody. With the introduction and adoption of digital assets, tokenised RWAs, custody is no longer limited to just holding securities.
“We are moving towards a hybrid financial system where traditional securities, digitally native assets and tokenised real-world assets, and different forms of digital money coexist,” Kessler comments.
“Unified custody enables these assets to be fungible and interoperable across different ledgers and technology, traditional and digital, thus enabling ultimately cross-ledger settlement.”
According to Kessler, the role of unified custody aims to remove the burden of custodians to connect and directly operate the many new ledgers. For instance, in a delivery-versus-payment (DvP) setting, he describes that, through unified custody, the delivering party can operate in a traditional setting expecting payment through traditional means, and the purchasing party could pay using digital money and receive the purchased asset in their onchain wallet.
However, there are still several constraints to bridging legacy asset pools and digital liquidity.
Baker remarks that bridging the gap creates a data challenge because, “where a tokenised asset and its conventional equivalent are described differently, eligibility and ownership have to be re-established each time collateral moves”. He adds that shared standards like the Common Domain Model (CDM) allows both to be treated consistently.
Accelerated settlement
With the T+1 go-live date for the UK fast approaching, many firms are already planning ahead for real-time settlement. Despite this planning, there remain many operational hurdles that firms must clear, with added pressure on firms to remove manual touch-points.
According to a report put forth by Tokenovate, 83 per cent of UK post-trade professionals say their firms are prepared for the October 2027 deadline, but only 32 per cent describe operations as fully prepared today.
The report lists trapped liquidity as a material burden; 98 per cent of firms regard tied up capital as a result of slow or fragmented settlement, as a risk to their organisations.
Baker provides additional insight into these operational hurdles, stating that the biggest constraint is the coordination between cash, collateral, and securities. “Institutions can have sufficient liquidity overall while still struggling to mobilise it at the point of need because assets sit across different systems, become available at different times, and often require manual intervention before they can move,” he says.
The room to absorb delays is shrinking as settlement cycles shorten, Baker explains, and firms need a clearer view of where eligible assets are held and whether they can be mobilised in time to settle. Similarly, Kessler believes that knowing where assets are and if they can be used is a key part of what must be addressed, suggesting the ability to move assets quickly between digital and traditional environments is another key challenge.
“Ultimatley, real-time settlement needs to be matched by much more effective intraday liquidity management, supported by interoperable infrastructure, and clear rules,” says Kessler.
Different treatment for different assets
Unsurprisingly, regulatory frameworks surrounding the evolution of securities and assets are continually updated to ensure safety and security of the assets as the landscape continually shifts. This does not mean that assets will be handled in the same way within a unified custody framework.
“Different assets will continue to have different legal and safekeeping requirements,” Kessler expressed. “The challenge is to preserve those protections and segregation requirements underneath a consistent client experience.”
Baker concurs, explaining that a unified custody model needs to preserve legal and operational controls attached to each asset. “As the range of instruments expands, custodians need to be able to show clearly who owns an asset, how it is segregated, which contractual rights apply, and when settlement has become final.”
Both Baker and Kessler implore that regulatory clarity and transparency are vital, as distinctions and ownership must remain visible throughout the process.
Forward looking
The development of custody is still in early stages, as is much of the rest of the sector. Nothing will happen instantaneously and, looking forward, unified custody will likely play a role in how the market shifts.
Kessler believes the lines between traditional and digital infrastructure should become increasingly blurred, and anticipated greater connectivity between existing securities, infrastructure, and blockchain-based networks.
“Unified custody will certainly be part of that evolution,” he states, “but regulated interoperability is the critical ingredient.”
Baker also believes the market will increasingly become more hybrid with traditional and modern infrastructure operating alongside each other.
“Unified custody is likely to develop alongside this, particularly as clients look for a more coherent view of assets held across different environments.”
Ultimately, the roadmap forward is still unfinished but ensuring interoperability, regulatory clarity, and certainty in asset location and availability will be key in development — something unified custody aims to accomplish.
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