UBS Offers Bond Traded on Traditional and Blockchain Exchanges

Wednesday, 09/11/2022 | 08:46 GMT by Damian Chmiel
  • The new bond is digital only, available on SDX and SIX platforms.
  • It is the first public debt instrument available from traditional and digital markets.
UBS

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 . 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 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.

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 . 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 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.

About the Author: Damian Chmiel
Damian Chmiel
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1506 Articles
  • 32 Followers

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