In his latest blog, Alex Taylor, Business Development Lead at The International Stock Exchange (TISE), unpacks tokenisation, the benefits and what it means for secondary trading, including platforms such as TISE Private Markets.

Tokenisation is a buzz word at the moment – everyone seems to be talking about it! 

Tokenisation is revolutionising the way that we own, and trade, assets. It unlocks new opportunities for investment, liquidity and accessibility through converting real-world, assets (such as real estate), securities/stocks and other assets (see below) into digital tokens. The tokenisation market was valued at circa $3.5 billion in 2024 and is estimated to be north of $15billon by 2031.

"Tokenisation is a buzz word at the moment – everyone seems to be talking about it!"

Tokenisation is the process of converting ownership rights of an asset into tokens that are stored on a blockchain. Each token represents a portion of the asset, enabling investors to trade small amounts of potentially high-value assets. This enhances liquidity for typically illiquid assets as more people can participate in ownership given that they won’t need large capital investments to enter the market.

Real estate

One of the most promising areas for tokenisation is real estate. Traditionally, investments in real estate require a significant capital investment whilst having lengthy transaction times and complex / prolonged legal processes. Tokenisation simplifies the whole process, allowing properties to be divided into tokens (digitally), enabling investors to purchase a fractional share/s of a property whilst using smart contracts during trading to automate transactions and remove intermediaries.

"Other assets such as art, commodities, IP, stocks/securities etc can be tokenised – making traditionally illiquid markets more accessible."

As an example, a commercial property worth £100 million may be divided into 1 million tokens, worth £100 each. Investors are then able to buy as many they’d like to, gaining exposure to the real estate market without having to buy the full property. They are then able to diversify their portfolio more effectively. 

Other assets such as art, commodities, IP, stocks/securities etc can be tokenised – making traditionally illiquid markets more accessible.

Benefits of tokenisation

• Liquidity – Fractional ownership enables buyers/sellers to trade traditionally illiquid assets easier.
• Accessibility – Investors can participate in high-value markets with smaller amounts of capital. This opens access to asset classes that were traditionally exclusive to the wealthy/institutions
• Transparency – Blockchain technology ensures that ownership/trading of tokens is recorded making for transparent record keeping.
• Cost – The use of smart contracts can automate transactions and reduce expensive intermediary costs. This allows for faster settlement times and lower cost.

Secondary trading of tokens

One of the advantages of tokenisation is that the digital assets can be traded on secondary markets. This allows investors to buy and sell their tokens on digital exchanges quickly and efficiently which enhances market liquidity. 

Secondary trading also provides a natural, continuous, price discovery mechanism with asset values updating based on the market demand and transactions. This can help to attract new/more investors helping to boost liquidity and market efficiency. 

TISE Private Markets and tokenisation 

At TISE we are currently exploring opportunities within tokenisation for the use of our private markets offering, TISE Private Markets, to trade tokens/shares between investors. We have been in discussions with various tokenisation firms (who specifically focus on tokenising real-world assets) to integrate TISE Private Markets into their models, providing them with their own ‘stock exchange in a box’ for the registry management, settlement and trading of tokens.

"We are exploring how TISE Private Markets can facilitate the trading of tokens without buyers & sellers paying any commissions/fees to trade."

We are exploring how TISE Private Markets can facilitate the trading of tokens without buyers & sellers paying any commissions/fees to trade. Our disintermediated model allows us to charge a single, attractive, annual fee to tokenisation operators, or the asset owner, that enables as many auctions/trades as needed throughout the year.

Tokenisation is transforming asset ownership and investment, breaking down barriers to entry and enhancing market efficiency. Please get in touch if you’d like to discuss tokenisation further and how TISE Private Markets can help with secondary trading!