How Does Tokenization Simplify the Settlement Process for Financial Derivatives?

Tokenization simplifies settlement by allowing the underlying assets and the derivative contracts themselves to be instantly transferred and cleared on the blockchain. Traditional settlement can take days due to manual processes and multiple intermediaries.

With tokenized assets, the smart contract can automatically execute the delivery-versus-payment (DvP) upon expiration, eliminating counterparty risk and reducing the need for central clearing houses.