UBS launches the world's first digital bond that can be traded on both blockchain-based and traditional exchanges.
UBS is issuing a digital bond for the first time. With a volume of more than 375 million Swiss francs ($371 million), the security can be traded on both traditional exchanges and as a digital bond on the blockchain exchange SDX, the Swiss bank announced Thursday.
The digital bond has the same structure, legal status, and rating as a traditional UBS unsubordinated unsecured bond, according to the statement. However, it is the first digital bond from a banking institution in the world to be listed, traded, and settled on a regulated digital exchange.
«UBS is committed to using technology not just as an enabler, but to making it a true differentiator for UBS,» Beatriz Martin, UBS Group Treasurer, said
Special Infrastructure Unnecessary
Investors can invest in a digital bond regardless of whether they have blockchain infrastructure themselves, removing a hurdle on the way to introducing new disruptive technologies that can make bond issuance faster, more efficient, and easier, UBS said.
SIX Group's digital exchange SDX (SIX Digital Exchange) launched in the fall of last year after years of preliminary work. Its first product was a digital bond issued by SIX Group itself.
Faster Settlement
Since SDX digital investment products are traded and held via the house bank, investors hardly feel any difference compared to conventional products. Officials say the immediate advantage of SDX is primarily in the post-trade area, where trade settlement is instantaneous and without counterparty risk, thanks to so-called atomic swaps.
With conventional exchanges such as SIX, it takes an average of two days before a trading transaction is settled with the transfer of the securities and the transfer of the purchase amount.
