Listing Bonds under Foreign Law: What It Means for Digital Bonds

This development represents a significant expansion for SDX, especially regarding bond listings. Moving forward, SDX will have the capacity to include bonds governed by foreign laws, with the condition that the global certificate is deposited with a central securities depository recognized by SDX (excluding SIX Digital Exchange AG). This advancement is crucial as it widens opportunities for issuers from various jurisdictions to utilize SDX’s infrastructure, enhancing diversity and accessibility within the bond market.

Although the primary focus of this new permission relates to bond listings, SDX sees broader opportunities emerging in the field of digital asset trading. We aim to accommodate market players who prefer issuing bonds through their ‘home’ Central Securities Depositories (CSDs), providing them with access to a digital market infrastructure. Additionally, while these bonds may initially be issued through established CSDs, our vision extends towards tokenization, enabling them to be seamlessly traded on exchanges with atomic settlement. This initiative not only expands our market reach but also paves the way for innovative trading offerings, enriching our digital asset ecosystem and opening new avenues for investors and issuers alike.

By embracing bonds governed by diverse legal frameworks, we foresee a broader participation of market players in our platform. This inclusivity has the potential to stimulate liquidity as more issuers engage with SDX. Additionally, providing different market participants with various avenues to access a new-generation market infrastructure can expedite the market’s transition.

At SDX, ensuring the security and integrity of digital bonds is paramount. We’ve adopted comprehensive measures to address cybersecurity concerns effectively, in line with endorsements from major rating agencies like Moody’s. Moody’s assessment acknowledges that technology-related risks on our blockchain-based platform are effectively mitigated, equivalent to traditional issuance methods. This recognition reflects our commitment to meeting stringent regulatory standards, ensuring the same quality standards as traditional infrastructures.

SDX and SIX share the same comprehensive business continuity plan, ensuring operational resilience. This plan includes a 10-day grace period to address any potential disruptions promptly, underscoring our commitment to maintaining uninterrupted service. Additionally, the private permissioned nature of SDX’s DLT platform significantly reduces technology-related cyber risks. Moody’s affirms that digital bond issuance on SDX does not increase cyber risk exposure to the issuer. This is due to the absence of direct links between the issuer’s IT systems and our blockchain platform.