By
Temitope Olatunji
April 16th, 2024
The SIX’s prototype platform will run test cases to demonstrate the potential of SDX’s trading model, as well as settlement on DLT.
Swiss stock exchange SIX announced that they have launched a pilot version of its exchange and central securities depository (CSD) for digital assets.
This prototype platform, launched under SIX Digital Exchange (SDX) which is its digital assets branch, is expected to experience the even better performance as it will be proceeding towards a full launch slated for Q4 2020.
According to Jos Dijsselhof, who is the head of SIX, the existing system could be completely replaced by the SDX within just a decade. Nevertheless, the Swiss exchange still has to deal with regulatory and other related issues with the Finma market watchdog.
He added that SIX Group has not yet chosen the specific products to be listed. However, according to the information available, it is expected that to begin with the company will offer some stocks in cooperation with Credit Suisse, JPMorgan and Citibank.
As per the announcement, the platform is aimed to “showcase the future of financial markets,” and acquire feedback from early testers as well.
SDX also intends to show that a distributed ledger technology (DLT)-based CSD can “be integrated with a central order-book stock exchange model to ensure fair market conditions for all.”
Thomas Zeeb, chairman of SDX and member SIX’s executive board, said:
“The launch of this prototype is a major milestone in creating a credible digital infrastructure for moving our industry forward. We are now one step closer to demonstrating the viability of our vision for the financial markets of the future and, ultimately, for the way people and businesses access capital.”
Early performance possibilities of the platform for “test cases” will cover the allotment of digital security tokens. Also, it will enable those tokens to be traded in real-time and to be instantly settled as well.
From the company, they also said that this will include the cash-leg of the transaction accepting the concept of a payment token, and also the access to a distributed portal where it would be possible to monitor transactions across specific DLT member nodes.
SDX’s trading facility will be pretty much similar to the SIX infrastructure, and token issuance will use SIX’s Connexor reporting service and performances.
Eventually, SDX puts its focus on enabling instant settlement but includes no counterparty risk or any requirements for default fund collateral at a central coequal.
Phase two of the prototype is expected to be ready, as the company said, in the coming months, and will take in feedback from this initial phase. According to SDX, it will also add the first post-trade and digital custody functionality. Exchange users will be able to hold their assets on the SDX in a “distributed way,” with access through the use of a private key.
This is an interesting development after in May the Swiss national stock exchange group announced the plans to introduce its own stablecoin. It was said that the coin would be pegged to the Swiss franc and would be used in transactions on SDX. SDX was meant as an exchange that would offer trading in selected stocks and then the list of offerings would be expanded to other stocks, bonds and probably exchange-traded funds. It was also mentioned that SDX might allow trading in assets that are not securities like paintings, for example.