TRADE Talks: Prescient Investment Management’s Cheree Dyers

Why It Matters

The analysis underscores that the practical adoption of blockchain‑based settlement hinges on infrastructure and liquidity alignment, shaping the future of institutional portfolio construction and risk management.

Key Takeaways

• Faster settlement reduces counterparty risk, improves capital usage
• Integration requires alignment with custodians, clearing houses, regulators
• Fragmented liquidity hampers efficient price discovery on tokenised markets
• Active ETFs enable portable alpha, blend low-cost beta
• Innovation succeeds when regulation, infrastructure, and liquidity evolve together

Pulse Analysis

Digital rails promise near‑real‑time settlement, cutting the traditional T+2 lag and freeing capital for additional trades. For institutional investors, this could translate into lower funding costs and reduced counter‑party exposure. However, the theoretical gains evaporate unless the new settlement layer plugs seamlessly into existing custodial, clearing and reporting systems. Regulators also demand that tokenised holdings meet the same segregation and finality standards as legacy securities, making a coordinated infrastructure upgrade essential for any meaningful efficiency boost.

Liquidity is the linchpin of any tokenised market. Without dedicated market makers and robust liquidity providers, price discovery suffers and bid‑ask spreads widen, eroding the cost advantage of faster settlement. Fragmentation across exchanges, alternative trading systems and crypto‑native platforms disperses order flow, making best‑execution harder for large institutional orders. Establishing credible, balance‑sheet‑backed liquidity sources that operate across venues is therefore a prerequisite for scaling tokenised instruments to the volumes required by buy‑side desks.

Meanwhile, buy‑side mandates are evolving toward a barbell structure: high‑liquidity ETFs on one end and private or alternative assets on the other. Actively managed ETFs are gaining traction, offering a hybrid of low‑cost beta exposure and systematic alpha generation. This shift fuels the rise of portable‑alpha strategies, where firms overlay data‑driven return streams onto core index holdings. Success in this new landscape depends on sophisticated execution capabilities, risk discipline and the data infrastructure to monitor both traditional and tokenised assets in real time.