SDX and FQX to partner on blockchain-based short-term debt instruments

New partnership aims to break liquidity silos while also enhancing trust and transparency.

SIX Digital Exchange (SDX) and SIX Fintech Ventures portfolio company, FQX, will partner to allow the use of FQX’s blockchain-based short-term debt instruments, eNotes, on SDX.

Short-term financing markets today have an estimated $65 trillion in annual transaction volumes worldwide. However, legacy systems and a lack of global standardisation mean these markets are widely fragmented and inefficient, causing liquidity silos.

eNote, which is FQX’s infrastructure for a standardised, digital debt instrument, works alongside SDX’s digital financial market infrastructure to break these silos. As a result, locked up liquidity is released.

An eNote serves as an unconditional agreement to pay a specific amount to another party at a specific date in the future and can be modularly structured to fit any financing purpose. The eNote is blockchain-based and is easily transferable to any third party such as an investor.

When compared to other financing tools, FQX claim eNotes excel through their modularity and global transferability, based on a standardised legal framework.

Single eNotes are stored as NFTs on a blockchain. An issuer can obtain financing in a manner that resembles commercial papers through issuing multiple eNotes.

“Bringing eNotes on to SDX is a crucial step for FQX on our mission to creating the global debt infrastructure for the future of finance, allowing institutional investors to directly access eNotes via their custody banks,” said Benedikt Schuppli, co-founder & co-CEO of FQX.

In September last year, SIX gained regulatory approval from the Swiss Financial Market Supervisory Authority (FINMA), which authorised SIX Digital Exchange AG to act as a central securities depository – a market first for digital securities.

A spokesperson for SIX stated that the authorisation enables SDX to go live with a fully regulated, integrated trading, settlement, and custody infrastructure based on distributed ledger technology for digital securities.

“As the world’s first fully regulated and fully integrated securities settlement and custody platform to trade, settle and custodise digital assets we at SDX we have built the strongest and safest foundation upon which to build a global liquidity network for digital assets,” said David Newns, head of SIX Digital Exchange.

“The network will be built by establishing strategic partnerships with providers such as FQX. SDX’s collaboration with FQX thus represents a key step in the building out of our ecosystem by providing trading, settlement and custody of FQX eNotes on SDX.”