Full Replication Model
Every DFMREIT token is backed 1:1 by real constituent shares held in institutional SPV custody. No synthetics. No swaps. No basis risk.
Full replication vs. synthetic
There are two ways to build an index product. Fractit has chosen full replication — the harder path, and the only one consistent with institutional-grade transparency.
Underlying exposure
Actual constituent shares in SPV custody
Derivatives or swap contracts
Counterparty risk
Custodian only
Swap counterparty + custodian
Basis risk
Zero — 1:1 to index
Present — structural divergence possible
Transparency
Full — holdings publicly disclosed
Partial — swap terms often opaque
Regulatory standing
Strong — direct asset backing
Varies by structure
How it works
When a user subscribes for DFMREIT tokens:
The user submits CC or USDC via their whitelisted Canton wallet.
DFMREIT tokens are issued immediately at the current market price.
Fractit's operations layer off-ramps the proceeds via licensed FX and brokerage partners.
The equivalent value of constituent shares — weighted to the current DFMREI composition — is purchased on the DFM via the partner broker.
The purchased shares are transferred to the Fractit-linked SPV and held in institutional custody.
At the end of this process, every token in circulation is backed by a real-world shareholding. There is no gap between what the token represents and what the SPV holds.
The SPV structure
The SPV (Special Purpose Vehicle) is the legal entity that:
Holds the beneficial interest in the underlying DFM-listed shares
Is the named account holder at the institutional custodian and depository
Rebalances holdings following each DFM quarterly rebalancing cycle
Processes corporate actions in accordance with the DFM index methodology
The SPV is structured to ring-fence underlying assets from Fractit's operational entity, providing an additional layer of protection for token holders.
Custody and depository
The underlying shares held by the SPV are safeguarded by an institutional custodian and registered with the relevant securities depository. The custodian is responsible for:
Safekeeping of shares and settlement of broker trades
Processing of corporate action instructions from the SPV
Providing daily custody valuations used in NAV calculation
Reconciliation reports disclosed to token holders
Rebalancing
Following each DFM quarterly rebalancing, Fractit's operations team:
Receives updated constituent weights from DFM / S&P DJI
Calculates required trades to bring SPV holdings in line with the new index weights
Executes trades via the licensed broker partner during DFM trading hours
Reconciles post-rebalance holdings against the reference weights
Publishes a rebalance summary to token holders
Rebalancing activity is disclosed in advance and reflected in the NAV on the rebalance effective date.
Current DFMREI constituents
The DFMREI currently consists of four DFM-listed companies classified under the GICS Real Estate sector:
Emaar Properties PJSC
EMAAR
Largest constituent; developer of Burj Khalifa, Downtown Dubai, and Dubai Mall
Emaar Development PJSC
EMAARDEV
Subsidiary of Emaar Properties; focused on build-to-sell residential and commercial assets in the UAE
Deyaar Development PJSC
DEYAAR
Mid-size Dubai developer with a diversified residential and commercial portfolio
Union Properties PJSC
UPP
Property development and investment company listed on DFM
Note on weights: Constituent weights are dynamic — they change continuously with market prices and are reset at each quarterly rebalancing by S&P DJI. Live weights are displayed in real-time on the Fractit platform and are not published as fixed figures in this documentation.
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