In a market first for digital securities, the Swiss Financial Market Supervisory Authority (FINMA) has authorised SIX Digital Exchange AG to act as a central securities depository and the associated company, SDX Trading, to act as a stock exchange.
FINMA says that it recognises the innovative potential of new technologies for the financial markets. In order to facilitate serious innovation, it applies the existing provisions of financial market law in a consistently technology-neutral way, i.e., in keeping with the “same risks, same rules” principle,” the supervisor said in a statement.
Under Swiss law, business models for the multilateral trading or settlement of DLT-based securities can be approved in one of two ways: in the traditional form under the Financial Market Infrastructure Act (FMIA), whereby the corresponding offering will only be open to supervised financial institutions; or, alternatively, as a DLT trading facility under the DLT Act, which allows organisations to obtain a single licence for the trading and settlement of DLT securities.
The licences granted to SDX are in the framework of the FMIA and their offering is aimed at supervised financial institutions.
“This authorisation enables SDX to go live with a fully regulated, integrated trading, settlement, and custody infrastructure based on distributed ledger technology for digital securities. With these licenses, SDX can now offer the highest Swiss standards of oversight and regulation,” commented a spokesperson for SIX, of which SDX is part.
“Over the coming months and years, SIX Digital Exchange will continue to invest in building out the digital financial ecosystem to create a global liquidity network for digital assets by engaging in cooperative ventures with partners and accelerating the onboarding of various global and local financial players. As this international customer base expands to include banks, issuers, insurance firms, institutional investors, the members of SDX will create a global exchange network for digital assets, unlocking global liquidity based on distributed ledger technology.”
Thomas Zeeb, global head, exchanges & member of the executive board, SIX, noted that, “The digitalisation of financial markets continues apace, and while the final shape of the market is still evolving, this is an important milestone in providing institutional investors with a safe and robust infrastructure meeting all of the core requirements of a traditional exchange and CSD infrastructure.”
He described the approval as an important milestone in bringing the digitalisation of capital markets into the mainstream, but added that, “It is only the beginning. We will continue to work with our clients, regulators, and other stakeholders to shape the markets of the future.”