First approval granted for a stock exchange and central securities depository for trading of tokens
The Swiss Financial Market Authority FINMA announced on 10 September 2021 that it has granted for the first time approval to a stock exchange and a central depository (Zentralverwahrer) for the trading of tokens. Both institutions operate financial market infrastructures based on the distributed ledger technology (DLT).
FINMA has authorised SIX Digital Exchange AG to act as central depository (Zentralverwahrerin) and SDX Trading AG to act as stock exchange. The services of SDX Trading AG are exclusively addressed to supervised financial institutions.
While it is the first time that licences have been issued in Switzerland for infrastructures that facilitate the trading of digital securities in the form of tokens and their integrated settlement, these approvals were still issued based on the traditional licensing process and not as DLT trading venues.
There are two different processes of authorising business models for multilateral trading or settlement of securities based on the DLT: (i) the traditional approval process in the context of the Swiss Federal Financial Market Infrastructure Act (FMIA) and (ii) the process based on the DLT bill which entered into full force on 1 August 2021 and was also inserted in the FMIA. While the former is only available for financial market infrastructures accepting supervised financial institutions as participants, the DLT legislation provides for an authorisation to be obtained for trading and settlement of DLT securities, which allows the admission of end clients as participants.
As mentioned in earlier stages, FINMA emphasised that financial market provisions are applied on a technology-neutral basis in accordance with the principle "same risk, same rules". In this context, compliance with the applicable protective goals has priority.