The SIX Digital Exchange (SDX) is live. Today the holding company SIX issued its own CHF 150 million ($162 million) bond as a digital asset with Credit Suisse, UBS Investment Bank, and Zürcher Kantonalbank acting as the joint lead managers.
“The first issue of a tokenized bond on the SIX Digital Exchange as well as its listing and placement in the market proves that the forward-looking distributed ledger technology (DLT) also works very well in the highly regulated capital market. This transaction marks the beginning of a new era,” said Thomas Zeeb, Global Head of Markets at SIX.
The issuance was split into two parts, a CHF 100 million digital bond listed on SDX and CHF 50 million conventional bond listed on the SIX Swiss Exchange. The company said it was heavily oversubscribed.
SDX is built using R3’s Corda enterprise blockchain. “This is one of the biggest changes we are likely to see in financial market infrastructure in our lifetime,” said Todd McDonald, R3 co-founder. “In fact, if ever there was a David & Goliath moment in the history of capital markets and financial market infrastructure, it’s the birth of Six Digital Exchange.”
Talking earlier today at an OMFIF conference, Mathias Studach, Head of Finance and Risk at SIX Digital Exchange said the first security token issuance would be some time this year. Clearly he wasn’t allowed to let the cat out of the bag.
The exchange initially will support digital bonds and digital equities for both private placements and secondary market trading.
CBDC experiments
Studach also spoke about SDX’s central bank digital currency (CBDC) experiments. However, there is not yet a go-ahead for a wholesale CBDC. Last year, SDX confirmed to Ledger Insights that the launch plan is to use an SDX Coin linked to Switzerland’s real-time gross settlement (RTGS) system SIC, which is also operated by SIX.
The Swiss National Bank previously shared results of its Project Helvetia for wholesale CBDC, which has now been extended. “The second phase of the exploration is focusing on an end-to-end integration of a wholesale CBDC which is being issued and settled on our test platform, the SDX platform, and is then being reflected in the core banking system of the Swiss central bank and also the commercial banks,” said Studach. The results of the latest trials will be published in January.
He also mentioned ongoing experiments with both the Swiss and French central banks. He described the experiments as being as close as possible to production.
Regulation
Another topic of discussion was the regulatory environment. In September, SDX received two licenses from Swiss regulator FINMA, allowing it to operate a digital stock exchange, a distributed central securities depositary (CSD) and execute settlement.
However, this is a wholesale license, so SDX cannot engage directly with retail customers.
Studach noted that this provides legal certainty in Switzerland for Swiss banks, investors, issuers. “When we want to grow business model globally, we need to get the same clarity on an international level,” he said and noted there are some international regulatory initiatives.
“It’s important that these initiatives are harmonized and international standards will evolve for digital assets. Because one of the main promises of distributed ledger technology (DLT) is that it can make cross border transactions faster, more efficient and cheaper,” said Studach.
Meanwhile, last week, SDX’s Chief Commercial Officer Peter Golder also spoke about the exchange’s plans at the Singapore Fintech Festival. SDX previously announced a collaboration with Japan’s SBI in Singapore. Golder confirmed this initiative relates to cryptocurrency.
Update: When the piece was first published, we didn’t know it would go live today. So it’s been substantially updated.
