The Swiss Stock Exchange (SIX) raised eyebrows across the cryptocommunity this week after announcing plans to host an STO in the coming months. The move is sure to bolster confidence in tokenization as SIX currently has a daily trading volume of around $5.18 billion. Additionally, the decision cements SIX as a first mover in the security token sector and provides SIX users with a plethora of advantages.
Earlier in the year, SIX announced plans to open a blockchain-based digital exchange called SDX. Initially, this exchange would handle the tokenization of stocks, bonds, and securities. The end goal for the platform would include the tokenization of nearly any item from equity to rare gems, paintings, and even collectors cars.
In a public statement, the company’s chairman, Romeo Lacher explained how tokenization enables previously untradeable assets to become tradeable. The transparency provided by blockchain technology creates a more efficient means of trading. Currently, trades can take multiple days to complete.
The reasons for this delay are simple. While most modern stock exchanges are digital, they are still tied to paper protocols. The actual trade process only takes seconds to complete. The delays occur following the trade as then the payments must be settled. Once the financial transactions are complete, the titles are finally transferred.
In comparison, the SDX platform is able to complete exchanges in fractions of a second. By incorporating distributed ledger technology (DLT), SDX is able to remove two of the three necessary steps required to complete transactions. The results are a more efficient and effective way to trade assets.
In a recent interview, SIX's CEO Jos Dijsselhof laid out his firms plan to construct an entirely “new stock market on the blockchain.” SDX will incorporate integrated trading, custody, and handling of digital assets. Company officials predict that the SDX platform will surpass SIX in trading volume within ten years.
Put Your Tokens Were Your Mouth is
SIX wants to show the world that they are ready for the digitization of the economy. In order to both validate and prove the SDX platform, company officials decided it's best to be the first STO launched. This is a bold move that is sure to bolster faith in the platform. Also, it’s a great way to ensure everything is functioning accordingly before opening the doors to the public.
In a recent report published by Reuters, Larcher explained how his team is currently clarifying the legal and regulatory issues regarding their planned STO. Developers want to have the platform fully functioning by the second half of 2019. The SDX launch delayed from the original summer release date so that more legal and regulatory research could be conducted.
SIX – Looking Forward
There is no doubt that the launch of SDX will further security token adoption in the market. Investors can't ignore the added security and convenience achieved through the integration of a blockchain-based protocol. You should expect to see a wave of other exchanges duplicating this strategy in the coming months as SIX starts to approach their SDX release date.