SIX Securities Services has created a distributed ledger technology (DLT) solution to cover the entire bond lifecycle, from issuance to settlement, in partnership with Digital Asset Holdings.
The solution allows for the issuing of bonds as smart contracts, which specify the dates that coupon payments are made, how and when repayments are made, and the payment amounts.
Smart contracts will be connected to a chain, allowing buyers to allocate funds to a bond by paying in digitised currency to the address of the bond.
SIX Securities Services partnered with Digital Asset Holdings in September 2016 in a bid to deliver DLT solutions to the Swiss financial market, and the prototype model was presented on 16 March.
Thomas Zeeb, CEO of SIX Securities Services, said: "Though still some way off for market-wide adoption, we are firmly of the belief that the potential shown here is promising, for us and for the industry as a whole. It also demonstrates our philosophy of focus and determination to research technological advancement with minimal disruption to our existing business models."
He added: "I am convinced that what we have achieved with this approach could revolutionise several processes used by the Swiss financial services industry while sustainably securing our role in the provision of services throughout the Swiss value chain."
The distributed ledger platform is intended to provide benefits through providing one source of data, a secure digital record of transaction data flows between market participants, reduced costs through removal of operational and reconciliation processes, and reduction of settlement and counterparty risk.
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