Tokenized TradFi Index: Exclusion Criteria
Standardized rules for removing or flagging tokenized real-world assets (RWAs) held within the TTI.
Overview
The Tokenized TradFi Index (TTI) applies a dedicated exclusion framework to safeguard index integrity, legal operability, and investor protection. Assets that breach any of the thresholds below are either flagged for review or removed outright, depending on severity and governance assessment.
Exclusion Criteria
Issuer & Custodian Risk
• Credit-rating downgrade below investment grade (e.g., < BBB-) for underlying bond issuers • Insolvency, license withdrawal, or enforcement action against issuer or appointed custodian
Protects investors from deteriorating counterparty quality
Redemption & Collateral Integrity
• Suspension of redemption or conversion rights for > 5 business days • Proof-of-reserve gap ≥ 1 % of outstanding tokens for > 48 h
Ensures each token remains fully backed and redeemable
Liquidity & Market Access
• Average daily trading volume < USD 4M across approved venues for 15 consecutive days • Bid-ask spread > 1 % on the main venue during normal hours for 10 consecutive days
Maintains orderly entry and exit for institutional-size tickets
Pricing Infrastructure
• Oracle outage ≥ 24 h or price deviation > 1 % from reference benchmark with no fail-over feed • Verified manipulation event confirmed by governance
Guarantees reliable NAV calculation and fair pricing
Regulatory Compliance
• Token or issuer becomes non-compliant with securities, commodities, or payments regulations in a core jurisdiction (US, EU, SG, UAE) • Asset added to sanctions list or subjected to trading ban
Preserves legal operability and reputational standing
Corporate / Structural Actions
• Corporate action (merger, split, coupon default) not reflected on-chain within the stipulated settlement window • Material change in underlying asset structure without token-holder approval
Prevents mismatch between the on-chain token and real-world instrument
Emergency Security Events
• Smart-contract exploit, custody breach, or verified loss of collateral
Protects index integrity and investor capital
Review & Grace Periods
Quarterly review aligned with the TTI rebalancing schedule.
Flagging window: 10 – 30 days to rectify non-critical breaches; immediate removal for security, insolvency, or regulatory emergencies.
Governance may invoke a Discretionary Governance Exclusion for unforeseen, material risks (e.g., sanctions exposure, severe ethical concerns).
Reinstatement Process
An asset previously removed may be re-evaluated for inclusion once all breaches have been fully remedied and a minimum of one complete review cycle (90 days) has elapsed. Reinstatement requires governance approval under the same transparency standards as initial inclusion.
This framework ensures the Tokenized TradFi Index maintains stringent risk controls and institutional-grade quality over time.
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