Digital Bonds Introduced in Lugano via SIX on SDX Platform

In the rapidly evolving world of digital finance, the SIX Digital Exchange (SDX) and the City of Lugano are making significant strides. The latest developments in their digital bond issuances are marking a new era for tokenized securities and expanding market infrastructure.

The City of Lugano recently issued a CHF 100 million seven-year digital bond, its fourth such issuance. This bond, registered on the SDX central securities depository (CSD), is a significant step forward as it marks the first time a full bond issuance has been digital, unlike previous issues which were split between digital and conventional. The bond, which carries a 0.6125% coupon, was led by Raiffeisen, UBS, and Zürcher Kantonalbank, and is listed on the main SIX Swiss Exchange.

Meanwhile, SIX has also been active in the digital bond space. They have issued CHF 250 million bond due 2032 and a EUR 500 million guaranteed bond due 2030, both fully regulated and managed within their ecosystem. These bonds, part of the launch of SDX in November 2021, are also registered on the SDX CSD and will be listed on the main SIX Swiss Exchange. The digital SIX bond has attracted significant investor interest.

The tokenization of these bonds is noteworthy as they are using the wCBDC for settlement. This transformation, as believed by Paulo Bortolon, Deputy CFO for Lugano, and others, will bring greater efficiency, transparency, and accessibility to markets. Bortolon, along with Lugano, is an active proponent of the financial revolution brought about by digital assets.

The SDX platform is unique in that it enables regulated issuance, trading, custody, and settlement of both native digital bonds and tokenized existing bonds (in CHF and EUR), all held under centralized custody by SIX SIS and transacted on a DLT-based permissioned ledger (R3’s Corda) for legal and operational integrity. The fractionalization of tokenized bonds is particularly transformative, as it opens the asset class to broader investor bases, including mutual funds, by facilitating incrementally customizable investments and increased diversification strategies.

These innovations promise more efficient, scalable asset management solutions, greater market liquidity, and expanded investor participation. Asset managers can implement tailored investment strategies at scale with automated portfolio rebalancing. This advancement positions the SDX platform at the forefront of digital finance infrastructure, potentially catalyzing broader adoption of blockchain-enabled securities markets in Switzerland and beyond.

The City of Lugano’s involvement in digital bond issuance underscores growing municipal and public sector interest, further validating the market’s confidence in the technology and the regulatory framework supporting it. As we move forward, it is clear that the SDX is cementing its role as a leading hub for digital bond innovation, combining tokenization, regulation, and traditional financial market elements to expand market access and asset management capabilities.

[1] SIX Digital Exchange Launches with First Digital Bond Issuance (SIX Media Release, 2021) [2] Banque Pictet & Cie and SIX partner for the tokenization of corporate bonds (SIX Media Release, 2021) [3] SIX Digital Exchange launches digital bond platform (SIX Media Release, 2021) [4] SIX Digital Exchange announces collaboration with Banque Pictet & Cie to tokenize corporate bonds (SIX Media Release, 2020) [5] SIX Digital Exchange to launch with first digital bond issuance from SIX (SIX Media Release, 2021)

The City of Lugano's digital bond issuance, registered on the SDX central securities depository (CSD), marks a significant step forward as it's the first full bond issuance to be digital, demonstrating the expanding market infrastructure in digital finance.
SIX's issuance of CHF 250 million and EUR 500 million digital bonds, registered on the SDX CSD, are fully regulated and managed within their ecosystem, showcasing the potential scalability and efficiency of blockchain technology in the finance industry.
The tokenization of bonds, such as those issued by the City of Lugano and SIX, is facilitating greater accessibility to markets through increased transparency and efficiency, as seen with the use of wCBDC for settlement.
The SDX platform, combining tokenization, regulation, and traditional financial market elements, is positioned at the forefront of digital finance infrastructure, offering potential catalysts for broader adoption of blockchain-enabled securities markets and asset management solutions.