The Swiss Financial Market Supervisory Authority (FINMA) has granted approvals for the SIX Digital Exchange to act as a central securities depository and the associated company SDX Trading to act as a stock exchange for digital assets.

With the granting of these two licenses, a closely knit value chain ranging from issuance and trading through to the settlement and custody of tokenised assets has been facilitated. The SDX offering is aimed at supervised financial institutions.

The regulator said that this is the first time that a license has been issued in the Swiss financial center for infrastructures that facilitate the trading of digital securities in the form of tokens and their integrated settlement.

SIX had previously released a blog post in December 2018 to first state its intentions to offer digital assets trading.

“FINMA 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.

 

At the same time, it makes sure that the protective goals of financial market legislation are preserved. Business models for the multilateral trading or settlement of securities based on so-called Distributed Ledger Technology (DLT for short) can be approved in one of two ways.”

First, in the traditional form of approval as a stock exchange or central securities depository as per the Financial Market Infrastructure Act (FMIA). This presupposes that the corresponding offering will only be open to supervised financial institutions.

Alternatively, trading in DLT securities can now be approved on the basis of the DLT Act. An approval to operate a DLT trading facility allows organisations to obtain a single license for the trading and settlement of DLT securities.

Furthermore, in this case it is also possible to offer the service to end clients, as long as the corresponding additional requirements – e.g. provisions on combating money-laundering and the relevant provisions of the Financial Services Act – are complied with.

Thomas Zeeb, Global Head, Exchanges & Member Executive Board at SIX said,

“The SDX approval process has proven to be an invaluable experience for SIX and for the industry as a whole. It has been instrumental in helping to define our offering, our strategy, and to build a new ecosystem to help our clients meet the increasing demands for commercial return that they face from their stakeholders.

 

This is an important milestone in bringing the digitalisation of capital markets into the mainstream, but it is only the beginning. We will continue to work with our clients, regulators, and other stakeholders to shape the markets of the future.”

Featured image: Thomas Zeeb, Global Head, Exchanges & Member Executive Board at SIX