Securities In Search of a Fiduciary: Rethinking Fiduciary Accountability In Tokenised Securities Markets

As financial systems move beyond a conventional intermediary based model, platform driven infrastructures are redefining the manner in which securities are issued, traded and governed. Tokenisation platforms being the new big thing in this realm are ‘no longer considered a fragile new means that could easily be smothered in the cradle by overzealous enforcement of laws and regulations applicable to brick-and-mortar businesses.’ As these tokenised platforms continue to evolve and grow, India is witnessing the integration of this technology across different industries, specifically the securities markets. Tokenisation platforms displaced traditional intermediaries without displacing the functions they performed, thereby creating a fiduciary vacuum that erodes trust and exposes the market to vulnerabilities. Despite the growing discourse on digital assets and blockchain governance, existing scholarship frameworks and insufficiently regulatory examine the relocation of fiduciary accountability in tokenised securities markets, particularly within the Indian securities law regime. The current regulatory framework under the Securities and Exchange Board of India and its related frameworks remains largely entity centric and fails to adequately address this doctrinal lacuna. The paper adopts a doctrinal and comparative legal methodology by analysing the existing Indian securities law, judicial precedents, and comparative approaches adopted in jurisdictions such as the United Kingdom, Singapore, and the European Union. This paper examines the operational reality of tokenised platforms in securities markets and how they reconfigure market dynamics, highlighting the emerging risks due to the lack of any fiduciary responsibility. By characterising themselves as passive technology providers, these platforms try to absolve themselves of the gatekeeping functions they functionally perform. To address these gaps, the paper proposes a Functional Fiduciary Test, supplemented by baseline compliance requirements and a voluntary Issuer Fiduciary Note, to fit in this new technological regime within India’s securities market framework.