Switzerland’s stock exchange is employing blockchain technology to become “the first market infrastructure in the world” to offer trading, settlement and custody for digital assets.
SIX Group, which owns the exchange, said it is building an integrated trading, settlement and custody infrastructure for digital assets and plans to roll out its first services in mid-2019.
The service will provide a safe environment for issuing and trading digital assets, SIX said, and enable the tokenization of existing securities and non-bankable assets so that previously untradeable assets become tradeable.
The use of distributed ledger technology, or blockchain, will underpin most of the service.
Thomas Zeeb, head of securities and exchanges at SIX, said challenges that the digital space currently faces included the absence of regulation that ensures official safety, security, stability, transparency and accountability – all of which contribute to a lack of trust.
The challenge is less in the trading of assets but rather in the custody and asset servicing, including asset safety, he said, and Zeeb advocated the use of a market infrastructure provider rather than a network of sub-custodians.
“Do you adopt a model with many sub-custodians, including inefficient interfaces and with inherent risks, or do you go with a recognised and regulated infrastructure provider who provides all steps of the chain in an integrated and secure model?
“We believe that the latter has significant value. As the stock exchange infrastructure for Switzerland, we know what it takes to build and run mission-critical and scalable, systemically important services,” said Zeeb.
Jos Dijsselhof, chief executive of SIX, said the venture marked “the beginning of a new era for capital markets infrastructures”.
“For us it is abundantly clear that much of what is going on in the digital space is here to stay and will define the future of our industry. The financial industry now needs to bridge the gap between traditional financial services and digital communities.”
SIX says the project will provide “a bridge for clients from the traditional to the new world”, in a timeframe that allows clients to choose how and when to “avail themselves of the new opportunities the new ecosystem provides”.
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