On 10 September 2021, FINMA granted the first ever stock exchange and central securities depositary licences to SDX Trading AG and SIX Digital Exchange AG to operate financial markets infrastructures based on distributed ledger technologies. With the granting of these two licences, a closely knit value chain ranging from issuance and trading through to the settlement and custody of tokenised assets has been facilitated for the first time in the Swiss financial centre.
Old licences for the new world
The licences granted to SDX have been granted on the basis of the traditional licence, namely of a stock exchange and central securities depositary as per the financial market infrastructure act. By choosing this route, SDX made the strategic decision not to serve end clients and tailor an offer directed to supervised financial institutions. As a result, SDX’s new licensing regime enables the direct trading and settlement as well as the issuance and safekeeping of securities and other asset tokens based on a distributed ledger technology.
The combination of both licences is a first in the Swiss financial centre and unlocks ground-breaking opportunities for SDX as it will not only be able to offer trading and settlement of digital assets but will also allow the issuance of securities based on DLT as well as their custody.
With this new offering out on the market, it is expected to see more and more financial institutions entering the market of digital assets as access to increased liquidity, security and institutional grade trading facility is ensured by this new and first player.
Conclusion and how PwC can support
The licences granted to SIX and SDX are a strong signal of the integration of digital assets in the Swiss financial centre. Without surprise, the first mover has designed its business model to serve exclusively supervised financial institutions, hence excluding individuals and other non-supervised entities. It remains to be seen when and if other applicants will seek a licence to offer direct access to a DLT trading venue to non-supervised entities and individuals. The adoption of blockchain technology and digital assets in the financial market is thus reinforced with this institutional offering.
Please contact us for any questions you may have regarding the new DLT trading facility licence and more broadly regarding your digital assets project. Our FinTech, Blockchain and Digital Assets team has extensive experience in advising various local and international clients ranging from token issuers, asset managers and crypto banks to financial infrastructures.