LONDON, Nov 24 Reuters British investment managers have got the goahead to develop tokenised funds, in which assets are split into smaller tokens backed by blockchain technology, the industry39;s trade body said on Friday.

Tokenisation, or fractionalisation, of funds will enable a fund39;s assets to trade more cheaply and transparently and investors to buy into a wider range of assets, industry proponents say.

Funds authorised by Britain39;s Financial Conduct Authority can take the first steps towards offering tokenised funds, provided the investments are in mainstream assets and valuation and settlement arrangements don39;t change, the Investment Association said in a statement.

Fund tokenisation has great potential to revolutionise how our industry operates, by enabling greater efficiency and liquidity, enhanced risk management and the creation of more bespoke portfolios, said Michelle Scrimgeour, chief executive of Legal General Investment Management .

Scrimgeour is chair of a working group which is working with the FCA and Britain39;s finance ministry to open up opportunities for tokenised funds. Other members of the working group include BlackRock, MG and Schroders.

Blockchain is a digital ledger that records ownership of tokens. So far, its main use has been for cryptocurrencies, which remain a relatively small part of the global financial system.

Britain is looking to bolster liquidity in its asset management sector in a revamp of its rules following…