New Swiss Exchange platform will use ‘revolutionary’ cryptographic technology for bond issuance

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A representation of the Bitcoin cryptocurrency can be seen in this illustration taken on August 6, 2021. REUTERS / Dado Ruvic / Illustration

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LONDON, Nov. 18 (Reuters) – The new digital trading and settlement arm of SIX Swiss Exchange will issue a bond to show how blockchain can benefit traditional securities and not just the crypto-assets it was originally intended for, announced Thursday the stock market.

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 David Newns, CEO of SDX.

The bond in SIX Group AG would have a total volume of 150 million Swiss francs and would mature in 2026, with the offer being oversubscribed several times, SIX reported.

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Two-thirds of the bond will be tokenized on SDX, the remainder on SIX’s main exchange, with the net proceeds used for general funding.

“This is a historic milestone in the evolution of DLT in the capital market,” Newns told Reuters.

DLT is the technology behind crypto-assets like bitcoin, and Newns said the benefit for investors would come from “atomic” or instant one-step trading and settlement.

Trading and settlement typically takes two days in traditional markets, creating risks such as the possibility that one side of the trade goes bankrupt before it is completed, monopolizing cash and capital.

“The instant settlement option is nothing short of revolutionary,” Newns said.

R3, the company behind the DLT technology used by SDX, said the bond issuance was closely watched by financial markets around the world.

“This is one of the most significant changes we’ll likely see in financial market infrastructure in our lifetimes,” said R3 co-founder Todd McDonald.

SDX received two licenses in September from Swiss regulators for digital initial offerings and secondary trading and settlement of stocks and bonds.

Newns said SDX will explore digital derivatives as well, although cryptoassets are “not part of our immediate offering.”

“There are more deals going on. This is just the start,” Newns said.

Newns is the third responsible for SDX, a project whose production has been delayed since plans for the platform were unveiled in 2018.

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Reporting by Huw Jones; Editing by Toby Chopra and Alex Richardson

Our Standards: The Thomson Reuters Trust Principles.

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