UBS Offers Bond Traded on Traditional and Blockchain Exchanges

UBS AG (NYSE:UBS), a Swiss financial company headquartered in Zurich, priced the first digital bond in the history of banking institutions that will be settled both on a blockchain-based and traditional exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term. It will be dual-listed at the SIX Swiss Exchange (SIX) and SIX Digital Exchange (SDX).

According to the press release, UBS issued an inaugural senior unsecured digital bond, worth 375 million Swiss francs, for three years with a 2.33% coupon. The digital bond has exactly the same rating and legal status as traditional bonds issued by UBS. Investors can purchase digital debt even if they do not use the blockchain infrastructure that has been necessary for such transactions until now.

“We are proud to leverage distributed ledger technology to launch the inaugural UBS digital bond. This shows our commitment to support the development of new financial market infrastructure. UBS is committed to using technology not just as an enabler, but to making it a true differentiator for UBS,” Beatriz Martin, the Treasurer at UBS Groups, said.

The bond is settled through the SDX network, a distributed ledger-based central securities depository (CSD). Settlement using SDX CSD is automatic and fast, without the need to involve a central clearinghouse.

Digital Bonds Getting Traction

The Swiss exchange has broad experience with listing, trading and settling blockchain-based products. In November 2021, SDX successfully placed the first senior unsecured digital CHF bond. The exchange is currently a place where a growing number of cryptocurrency ETFs, ETPs and other indexes linked to digital assets are listed.

The Tel Aviv Stock Exchange (TASE) also wants to issue its own digital bond. It cooperates with the Israeli Ministry of Finance (MoF) to implement government debt with blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term technology. Although the project dubbed ‘Eden' will be conducted as a pilot only, if successful, it could increase the popularity of such instruments in the future.