In an interview, David Newns, CEO of SIX Digital Exchange, explains how the digital exchange has developed since receiving FINMA approval and why asset managers should use SIX Digital Exchange.

David Newns

David Newns, CEO of SIX Digital Exchange

SIX Digital Exchange will continue to invest in building up the digital financial ecosystem with the goal of creating a global liquidity network for digital assets. How do you plan to reach that goal?

We started with the recent launch of SDX: the world's first fully regulated digital exchange with a license to operate a CSD on a decentralized ledger. SDX offers a fully integrated securities settlement and custody platform to trade, settle and custodise digital assets. Since then, we have already demonstrated that our platform can equally support wholesale CBDC to settle transactions in digital assets through Project Jura and Helvetia conducted in conjunction with the SNB and BIS and, in the case of Jura, also with the Banque de France. A CBDC is key to the successful build-out and adoption of a token-based financial ecosystem and to leverage the full potential of DLT and blockchain technology, for example the efficiency gains and risk reduction realized through atomic trading and settlement.

What we have deployed in SDX is effectively a very strong foundation. However, further geographic expansion and the creation of a global liquidity network for digital assets can only be achieved through collaboration with existing and new players, through the adoption of global standards, technical interoperability and regulatory harmonization. Our joint venture with SBI Digital Holdings to build out the Asian Digital Exchange in Singapore – focusing on Crypto and Digital Assets – is another major step in this direction.

SIX Digital Exchange has been Switzerland's central securities depository and exchange for digital assets since September 2021. How would you sum up your first 90 days?

I would say that this entire period has been very exciting and very intense. Our success was really the result of a tremendous and coordinated effort on the part of everyone at SDX, at the regulators and our clients. Ultimately, our unique proposition – "the world's first fully regulated digital exchange" – has laid the foundation we need for growth.

The onboarding and initial Digital Bond Transaction in November was another historic milestone for SDX, for Switzerland and for capital markets in general and has raised our profile and attracted attention around the globe. We have had overwhelming feedback and high interest for additional business ever since then. At the same time, I have been finessing the strategy around the next phase of SDX's evolution and I'm excited to see SDX continue its 2021 track record of industry 'firsts' in 2022.

Why should I invest in tokenized assets?

Token-based ecosystems supporting digital assets promise a variety of benefits ranging from widened access to capital markets (e.g. investors can invest into small and mid-sized companies, which so far haven't been traded publicly), increased transparency and liquidity, fractionalizing, efficiency gains, new investment opportunities, and so on. SDX has taken a pioneering role and laid the foundation with the launch of the first FMI-regulated Digital Asset Exchange based on Distributed Ledger Technology. Our platform and the product suite will be continuously enhanced to allow investors to take advantage of in the above-mentioned benefits.

Why should asset managers use SIX Digital Exchange?

Asset managers can profit from SDX’s unique proposition being a fully regulated Financial Market Infrastructure providing an integrated stock exchange and Central Securities Depository (CSD) on DLT.

SIX is well known, trusted partner and has a long track record in running systemically critical infrastructure. SDX can leverage on this expertise and provides its customers with robust and secure solutions in a nascent market. SDX is building the bridge between traditional financial institutions and the new token-based ecosystem.

Another important point is the time to market: SDX is productive and allows asset managers to immediately turn their demands into reality. The connectivity to the SDX platform is based on existing protocol standards allowing for a fast onboarding.

In addition, the regulation and legal certainty are two reasons for using our product: the SDX setup is based on existing and proven regulatory and legal frameworks (uncertificated securities).

And don't forget the liquidity: SDX has a live marketplace with onboarded and connected members covering buy- and sell side.

Last but not least, innovation is very important to us. Asset managers can profit from the atomic trading & settlement, which eliminates the counterparty risks by preventing settlement fails and allowing price improvement and speed of execution for on-exchange trading.

How has the coronavirus pandemic influenced the development of the new SIX Digital Exchange?

SIX Digital Exchange started pre-pandemic in 2018. The in-person collaboration was crucial to its inception, allowing us to establish the strategy and business model designs, while at the same time ramping up the organization and starting with the execution. The digital nature of SDX and also the DNA of the organization facilitated the instantaneous switch to a purely remote setting. It proved that SDX had the right structure, tools and also culture in place to continue and successfully complete the project, even under the new circumstances. However, I do believe that it will be paramount to have a balanced working model in place, which combines the best of both worlds. We have learned that working from home brings substantial advantages e.g. for work focus and also work-life balance while at the same time it will be paramount to foster collaboration and increase efficiency through in-person meetings and workshops, especially for highly complex and innovative businesses.

In your capacity as CEO of SIX Digital Exchange, which goal is at the top of your list and why?

As mentioned before, we have laid the foundation and now the focus has shifted towards building a functioning marketplace with increased members and liquidity. This requires close collaboration with participants from across the financial and digital asset ecosystem, further investments in platform capabilities and new products and services. At the same time, we need to take advantage of market developments and also explore and identify the benefits of new innovation in technology and in the non-traditional assets space.

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