UBS AG claimed that its digital bond settles using atomic settlement technology via the SIX Digital Exchange (SDX).
UBS AG introduces digital bonds that are traded on both traditional and blockchain exchanges On Nov. 3, the Swiss investment firm UBS AG unveiled its hybrid digital bond, claiming it to be the first publicly traded bond in history to settle on both traditional and blockchain-based exchanges.
The digital bond has the same instrument structure, legal status, and rating as a conventional UBS AG senior unsecured note, according to the bank. The bank stated in its statement:
“Through this bond, UBS enables investors, regardless of whether they have the blockchain infrastructure, to invest in a digital bond. This removes a hurdle on the way to adopt new disruptive technology that can make issuing bonds faster, more efficient and simpler.”
According to UBS, the senior unsecured digital bond is a three-year, 375 million Swiss franc ($272 million) bond with a 2.33% coupon. The bank will list the digital bond on SIX Swiss Exchange and SDX Trading.
Along with other senior unsecured notes issued by UBS AG, it will be eligible for inclusion in the Swiss Bond Index. With atomic settlement technology, the digital bond settles through the SIX Digital Exchange (SDX) distributed ledger-based central securities depository (CSD), which is instant and automatic, not requiring a central clearing counterparty.
“Investors will have the ability to automatically settle and clear the UBS digital bond on either SDX CSD directly or on SIX SIS,”
noted the bank. The project, according to Beatriz Martin, group treasurer at UBS, demonstrates the investment bank’s dedication to assisting in the creation of new financial market infrastructure utilizing technology, ” not just as an enabler, but to make it a true differentiator for UBS”.
Following remarks made by the company’s CEO last year characterizing cryptocurrency as a “untested asset category” and advising caution from investors during the bull market, UBS enters the area for cryptocurrencies.
The French bank Société Générale received approval as a digital asset provider (DASP) last month, enabling it to offer digital asset custody and trading through a subsidiary. Société Générale is another significant traditional financial institution in Europe. The bank joined other global DASP providers like eToro, Bitpanda, and Binance.
