SDX To Initially Focus On Digital Tokens

Traders Magazine Online News, April 2, 2019

Shanny Basar

Sven Roth, chief digital officer at SDX, said the new exchange will initially focus on digital tokens on its own distributed ledger technology, which will be provided by R3, before tokenising existing securities.

SIX, which manages Switzerland’s stock exchange and market infrastructure, said last July that it would be launching SIX Digital Exchange, a fully regulated and integrated trading, settlement and custody infrastructure for digital assets.

Jos Dijsselhof, chief executive of SIX, said at the time: “This is the beginning of a new era for capital markets infrastructures. The financial industry now needs to bridge the gap between traditional financial services and digital communities.”

This month SIX said it had chosen Corda Enterprise, R3’s blockchain platform, to provide the underlying technology for SDX.

Roth told Markets Media: “R3’s blockchain platform Corda Enterprise has been designed specifically for highly regulated environments and provides the right level of security and privacy. In addition, Corda is not only available as enterprise version but also as open source. This is important for our broader vision of creating an ecosystem and enable the developer community.”

He continued that SDX is expected to launch later this year subject to technology implementation, legislation and feedback from the co-creation with the user group.

“We have decided to initially focus on digital tokens on our own DLT so we have the right balance of products and functionality on day one,” Roth added. “Later we will tokenise existing securities such as equities, funds and structured products.”

SDX will also focus on initial digital offerings (IDOs) which will allow the exchange to support customers and users with the primary market services such as traditional stock exchanges provide in classic initial public offerings for selling equities.

David Nicol, digital assets at R3, said in a blog: “SDX is capturing the opportunity to be the first exchange to support both existing financial assets and new, digitally native assets on an institutional grade, fully regulated exchange with global reach. With a wide range of asset classes and participants on the roadmap, SDX is the first of a new generation of exchanges leading the way to an internet of value.”

Nicol continued that DLT allows peer to peer transactions without the need of a central counterparty, smart contracts that allow predefined trade lifecycle events to automatically execute at the same time for all market participants, and overlapping networks of value by tokenizing and trading many types of digital assets.

“Those assets should not only be traded in their single-purpose network, but should also be made available as collateral, payment, loan principal, etc. in other bilateral networks based on SDX’s regulated framework,” Nicol added. “For example, I will be able to buy shares in an equity trading network and post them as collateral on a different asset market.”

Nicol added that the ability to represent assets on digital platforms has been around since the 1960s but the important innovation is the ability of that asset to automatically initiate and react to programs through the use of smart contracts.

For more information on related topics, visit the following channels:

• Exchanges and ECNs