How does secondary market trading work for tokenised assets?

Why secondary markets matter for private assets

Private assets, unlisted fund units, private equity interests, property fund units, loan notes, are traditionally illiquid. There is no exchange on which they trade. Transferring them requires registry involvement, compliance verification, and often approval from the fund manager or board. The process can take weeks and requires both parties to engage administrators and legal advisers.

This illiquidity is a structural constraint on private markets. It limits the pool of investors willing to commit capital, because investors know they cannot exit before the fund matures or a redemption window opens. It also constrains pricing. Without a secondary market, there is no price discovery mechanism for private assets.

How tokenised secondary market transfers work

On Tokeniser, a secondary market transfer begins when a token holder initiates a transfer to another verified wallet. The platform checks the receiving wallet against the compliance parameters encoded in the token: is the buyer a verified investor? Do they meet the eligibility criteria for this fund? Would the transfer breach any foreign ownership limit or transfer restriction? If all conditions are met, the transfer is submitted to Redbelly Network and settles atomically. The token moves from the seller's wallet to the buyer's wallet, and the cap table updates in real time.

If any compliance condition is not met, the transfer is rejected before it reaches the blockchain. The seller is notified, and the cap table remains unchanged.

Price discovery and matching

Tokenisation removes the administrative friction from a secondary transfer but does not, by itself, create a marketplace for price discovery and buyer-seller matching. The parties to a secondary transfer on Tokeniser currently need to find each other and agree on a price independently. The platform processes the transfer once a willing buyer and seller have agreed.

Tokeniser itself will not be performing matching. It will either be solved via OTC (i.e. the transaction is between two already known to each other parties) or via an Automated Market Maker whereupon the investor transacts against a liquidity pool.

What tokenisation changes for secondary markets

Even without a formal secondary market venue, tokenisation materially changes the secondary market landscape for private assets. The time to complete a transfer compresses from weeks to seconds. The compliance verification that previously required manual checking is automated. The cost of processing a secondary transfer, registry fees, transfer agent fees, legal costs, is reduced to the on-chain transaction cost.

For fund managers, this means being able to offer investors a credible secondary transfer pathway without establishing a formal secondary market or exchange. For investors, it means that when a willing buyer is found, the transfer can be completed quickly and cost-effectively.

The liquidity caveat

Fund managers should be clear with investors about what secondary market capability means and does not mean. Tokenisation enables secondary transfers to be completed efficiently when a buyer is found. It does not guarantee that a buyer will be found at an acceptable price. For most private assets, the primary liquidity constraint is demand, not administration. Tokenisation addresses the administration constraint; addressing the demand constraint requires investor base development and, potentially, formal secondary market infrastructure.