CSC to explore tokenised finance with Northern Trust

Commonwealth Superannuation Corporation (CSC) is stepping up its exploration of tokenised finance, signing an agreement with Northern Trust that will examine how emerging digital technologies could be applied across institutional investment markets.

Testing the technology

The memorandum of understanding will see the organisations investigate areas including digital assets, tokenisation and new forms of digital money, with a particular focus on their potential use in investment operations and settlement. Rather than committing to the adoption of specific technologies, the agreement provides a framework for CSC and Northern Trust to assess their practical applications, including whether they could improve liquidity management and make settlement processes more efficient.

The organisations will also consider how established financial infrastructure could interact with newer digital asset systems, as well as the potential role of tokenised deposits, regulated settlement assets and other digital payment mechanisms. This broader scope moves beyond simple asset representation to explore how regulated mechanisms might function within a tokenised environment, addressing the regulatory and compliance requirements necessary for large-scale institutional deployment.

CSC chief of investment services Paul Abraham said the fund was looking at emerging technology through the lens of its investment operations and member outcomes. As long-term stewards of retirement outcomes for our members, CSC continues to explore innovations that have the potential to enhance efficiency, transparency, and resilience across investment operations. This collaboration with Northern Trust provides an opportunity to deepen our understanding of emerging technologies and their practical applications within institutional investment markets.

The latest agreement follows CSC and Northern Trust’s involvement in Project Acacia, a research initiative led by the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre. Project Acacia has examined how tokenised assets could operate within existing institutional market frameworks, providing a foundation for the two organisations to continue exploring the technology beyond their involvement in the project. This prior work laid the groundwork for the current partnership by identifying how existing legal and operational structures might accommodate digital innovations.

Northern Trust group head of strategic partnerships, digital assets and financial markets Justin Chapman said the development of digital finance could change the infrastructure underpinning institutional investment. The evolution of digital assets, tokenisation and digital money presents significant opportunities to modernise investment infrastructure and create more connected financial ecosystems. We are pleased to extend our collaboration with CSC as we explore how these innovations can support the future of institutional investing.

Looking at the infrastructure

As part of the partnership, CSC and Northern Trust will continue sharing information on developments in digital financial markets and consider further areas where they could work together as institutional uses for the technology development. This ongoing dialogue is essential as the regulatory setting and technical standards for tokenisation continue to evolve, requiring institutions to stay agile to understand the implications of new compliance regimes.