Swiss Bank UBS Unveils Publicly-Traded Digital Bond Settled on Blockchain

UTC by Bhushan Akolkar · 2 min read
Swiss Bank UBS Unveils Publicly-Traded Digital Bond Settled on Blockchain
Photo: Depositphotos

The digital-only bond from UBS will be issued on the blockchain-based platform of SIX Digital Exchange (SDX). The bond will come with instant settlement facility.

On Thursday, November 3, Swiss bank UBS AG introduced a new digital bond. The investment bank said that it is the first-ever bond to be publicly traded and settled on both – traditional exchanges as well as blockchain-based exchanges.

UBS Digital-Only Bond

Similar to a traditional senior unsecured note, the digital bond comes with the same legal status, rating, and investment structure. It is a 375 million Swiss franc-denominated three-year bond with a 2.33% coupon.

This is a digital-only bond that will be issued on the blockchain-based platform of SIX Digital Exchange (SDX). Along with SDX, the digital bond will also be issued on the SIX Swiss Exchange.

Irrespective of whether the investors have a blockchain infrastructure, UBS will allow investors to invest in this digital bond. This will help in removing any hurdles to adopting new disruptive technology which will make issuing bonds in a simpler, more efficient, and faster manner. Speaking of the development, Beatriz Martin, UBS Group Treasurer, said:

“We are proud to leverage distributed ledger technology to launch the inaugural UBS digital bond. This shows our commitment to support the development of new financial market infrastructure. UBS is committed to using technology not just as an enabler, but to making it a true differentiator for UBS.”

The digital bond will achieve settlement through the SIX Digital Exchange (SDX) distributed ledger-based central securities depository (CSD) network by leveraging the atomic settlement technology. This settlement will be instant and automatic and won’t require any central clearing counterparty.

Investors also can automatically settle and clear the UBS digital bond on either SDX CSD directly or on SIX SIS.

UBS Q3 Financial Report

Last month, the Swiss banking giant UBS announced its financial results for the third quarter of 2022. The company’s revenue dropped to $8.3 billion from $9.1 billion a year ago. The company’s net income for the third quarter was at $1.7 billion. This is a drop from the $2.3 billion drop reported during the same period last year. UBS Chief Executive Officer Ralph Hamers said:

“The macroeconomic and geopolitical environment has become increasingly complex. Clients remain concerned about persistently high inflation, elevated energy prices, the war in Ukraine, and residual effects of the pandemic”.

Issuing a blockchain-based digital bond, however, is a welcome development and will encourage more banks to follow.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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