UBS issues first bond traded on Blockchain and traditional exchanges

by Arthur · November 4, 2022

The CHF 375 million bond is digital only and will be issued on the blockchain-based platform of SIX Digital Exchange (SDX) while dually listed and traded on SDX and SIX Swiss Exchange (SIX)
The world’s first public reference bond that investors can access in both digital and traditional markets
First digital bond issued by a banking institution globally to be listed, traded and settled on a regulated digital exchange

UBS AG priced its first unsecured digital bond, a three-year bond of 375 million Swiss francs with a coupon of 2.33% (ISIN: CH1228837865).

The digital bond has the same instrument structure, legal status and rating as a traditional UBS AG senior unsecured bond, but is the first digital bond ever by a banking institution globally that will be listed, traded and settled on a regulated digital exchange.

#news UBS launches initial digital bond on #SDX platform! We are closer and closer to a full #DMI in #Switzerland. ▶️ #digitalset #Exchange pic.twitter.com/TQVKxfVC8F

— SIX Digital Exchange (@SDX_global) 4 November 2022

Through this bond, UBS allows investors, regardless of whether they have the blockchain infrastructure, to invest in a digital bond. This removes an obstacle on the way to adopting new disruptive technology that can make issuing bonds faster, more efficient and easier.

Beatriz MartinUBS Group Treasurer, said: “We are proud to leverage distributed ledger technology to launch the first UBS digital bond. This demonstrates our commitment to supporting the development of new financial market infrastructure. UBS is committed to using technology not only as an enabler, but to make it a real differentiator for UBS.”

The digital bond settles via the SIX Digital Exchange (SDX) distributed ledger-based central securities depository (CSD) network through atomic settlement technology. Settlement via SDX CSD is immediate and automatic and does not require a central clearing counterparty. Investors will have the option to automatically settle and clear UBS digital bonds on either SDX CSD directly or on SIX SIS via the operational link formally announced on 3 October 2022.

The digital bond will be dual-listed on SDX Trading and SIX Swiss Exchange and will be eligible for the Swiss Bond Index (SBI) along with all other UBS AG senior unsecured bonds listed on SIX.

Source: UBS

It is 2022 and somehow most fixed income markets are still opaque, illiquid, slow and oligopolistic. Bonds are a clear use case for blockchain as a settlement layer, and there should be an avenue for development like this in the US.

— Brett Harrison (@BrettHarrison88) 3 November 2022