LONDON, Nov 18 (Reuters) – SIX Swiss Exchange’s new digital trading and settlement arm will issue a bond to show how blockchain can benefit mainstream securities and not just the cryptoassets it was originally intended for, the exchange said on Thursday.
The Swiss Digital Exchange (SDX) will be the first fully regulated market infrastructure to issue a digital bond and use distributed ledger technology (DLT) for settlement, said SDX CEO David Newns.
The bonds in SIX Group AG will be denominated in Swiss francs and also be available on SIX’s main exchange.
“It’s an historical milestone in the evolution of DLT in the capital market space,” Newns told Reuters.
DLT is the technology which underpins cryptoassets such as bitcoin, and Newns said the benefit for investors will come from ‘atomic’ or trading and settlement in a single, instantaneous step.
Trading and settlement typically span two days in mainstream markets, creating risks such as the possibility of one side of the transaction going bust before completion, which ties up liquidity and capital.
“The option of instantaneous settlement is nothing short of revolutionary,” Newns said.
SDX received two licences in September from Swiss regulators for initial digital offerings and secondary trading and settlement of shares and bonds.
Newns said SDX will also explore digital derivatives, though cryptoassets were “not part of our immediate offering”.
“There are more transactions in the pipeline. This is very much just the beginning,” Newns said.
Newns is the third head of SDX, a project which has faced delays in going live since plans for the platform were unveiled in 2018.
Reporting by Huw Jones; Editing by Toby Chopra