Swiss DLT stock exchange wins long-awaited license to operate

SIX group has backed its new DLT exchange to enhance the way stocks and bonds are traded worldwide. © Keystone / Ennio Leanza

A new Swiss stock exchange has been awarded a license to trade digital assets using distributed ledger technology (DLT).

On Friday, the SIX Digital Exchange (SDX) was given the go-ahead by the Swiss Financial Market Supervisory Authority (FINMA) to operate as a stock exchange and central securities depositoryExternal link.

The licensing milestone means that SDX can now trade securities, such as company shares and bonds, on a digital platform that is similar to blockchain. SDX is backing the new technology to reduce trading delays and save on costs.

SDX’s parent company is SIX Group, which is owned by several Swiss banks and already operates Switzerland’s largest traditional stock exchange. In a statementExternal link, SIX said it will start onboarding financial firms around the world and exploring partnerships to “create a global exchange network for digital assets, unlocking global liquidity”.

It has already joined a consortium to build a DLT exchange in Singapore, along with a Japanese company that hopes to launch a similar platform in Osaka.

First unveiled in 2018, SDX had initially hoped to start trading a year later but until now was kept waiting by the regulator.

The new exchange will start trading without Head of Business (equivalent to CEO) Tim Grant, who was recently poached by US cryptocurrency broker Galaxy Digital last week. Grant will be replaced in October by David Newns, an executive at US financial services firm State Street.

Grant had previously told SWI Swissnfo.ch that he wanted SDX to expand into cryptocurrencies and other decentralised assets on public blockchains, but it’s unclear whether the exchange will now pursue this strategy.

Bumpy ride

SDX has already endured a few bumps and delays along the way to winning its stock exchange license. These included the departure of its first CEO and other executives in 2019 following “strategic differences” with SIX Group.

SDX is one of a number of DLT-compliant trading platforms to set up both in Switzerland and in other countries. Germany’s Deutsche Börse recently acquired the Swiss brokerage Crypto Finance as it builds out its own digital assets trading infrastructure. Other projects are ongoing in the United States, Singapore, Thailand and Japan, among other places.

Swiss company and financial laws have this year been updated to incorporate digital assets that operate on DLT systems, including the creation of a new DLT stock exchange category (although SDX has gone down a different licensing path).

This has paved the way for the creation of bespoke digital assets trading platforms, such as those launched by Sygnum Bank and technology company Taurus.