Swiss digital stock exchange branches out into Singapore

Switzerland and Singapore have for decades had close financial sector links. Keystone / How Hwee Young

The operator of Switzerland’s largest stock exchange, SIX Group, has set its sights on launching a trading platform for digital assets in Singapore. SIX Group is hoping to launch its Swiss Digital Exchange (SDX) in Switzerland next year.

SDX said on TuesdayExternal link that it has partnered with Japanese digital financial firm SBI Digital Asset Holdings, a unit of the SBI Group, to expand into Asia. It has applied to the Monetary Authority of Singapore, the country’s financial regulator, for a licence to go live in 2022.

Switzerland is one of several countries exploring the promised advantages of distributed ledger technology (DLT), a digital system closely related to blockchain. This would allow company shares and a range of other financial assets to be created and traded more efficiently.

It also promises the ability to customise securities with bespoke features, such as digital contracts that automatically pay out dividends and to create a new breed of previously untradeable assets, such as fine wines or classic cars.

While some digital assets already exist, Fernando Vazquez Cao, CEO of SBI Digital Asset Holdings, pointed out that the sector lacks fully regulated trading venues on which to buy and sell them.

“The benefits of digital assets are becoming increasingly understood by leading global financial institutions. However, one of the key hurdles to market success is the availability of institutional digital market infrastructure to drive the formation of liquidity,” he said.

SBI, which has a stake in Japan’s second-largest stock exchange, Japannext, is planning to launch a digital exchange in Osaka. In October, SBI also joined forces with Swiss digital assets bank Sygnum to form a fund that aims to invest up to $75 million (CHF67 million) in the growing sector.

Sygnum is linked to the SDX Swiss exchange project as co-owner of the Custodigit company that stores digital assets on behalf of clients. On Monday, SIX Group said it had taken a stake in CustodigitExternal link. Sygnum has also launched its own platforms for issuing and trading digital assets.

First announced in 2018, SDX has encountered some delays in getting off the ground in Switzerland. The launch date has now been set as the first half of 2021, pending approval from the Swiss financial regulator.

The digital exchange recently completed tests with the Swiss National Bank (SNB) to test the viability of a “central bank digital currency” (CBDC) being used to instantly settle trades. The proof of concept was declared a success, but the SNB cautioned that this did not necessarily mean it is poised to issue a CBDC for institutional players in the near future.