LONDON, Nov 18 (Reuters) – Swiss stock exchange SIX's new digital trading and payments unit will issue a bond showing how blockchain can help with mainstream securities and not just its original purpose of crypto assets, the exchange said on Monday.
The Swiss Digital Exchange (SDX) will be the first fully regulated market infrastructure to issue digital bonds and use distributed ledger technology (DLT) for settlement, SDX CEO David Nunes said.
SIX Group AG's bonds, with a total value of 150 million Swiss francs, are due to mature in 2026 but were several times oversubscribed, SIX said.
Two-thirds of the bonds will be tokenized on SDX and the remainder will be tokenized on SIX's main exchange, with the net proceeds being used for general fundraising purposes.
“This is a historic milestone in the evolution of DLT in the capital markets sector,” Nunes told Reuters.
DLT is the technology that underpins cryptocurrencies such as Bitcoin, and Nunes said the benefits to investors come from making transactions and settlements “atomic,” meaning they happen in a single, instantaneous step.
In mainstream markets, trading and settlement typically takes two days, creating risks such as the possibility that one side of a trade could fail before completion, trapping liquidity and capital.
“The option to pay instantly is truly revolutionary,” Nunes said.
R3, the company developing the DLT technology used by SDX, said the bond issuance is attracting attention from financial markets around the world.
“This is one of the biggest changes that will happen in financial market infrastructure in our lifetimes,” said Todd McDonald, co-founder of R3.
SDX received two licenses from Swiss regulators in September, for initial digital public offerings and secondary trading and settlement of stocks and bonds.
Nunns said SDX will also explore digital derivatives, but that crypto assets are “not part of our immediate offering.”
“There are many more deals to come, this is just the beginning,” Nunes said.
Nunes is the third person to head the SDX project, which has been delayed since plans for the platform were announced in 2018.
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Reporting by Hugh Jones; Editing by Toby Chopra and Alex Richardson
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