Trading with tokenized investment products successful in Switzerland

A proof of concept developed and conducted by the independent Capital Markets and Technology Association (CMTA) in Geneva has shown that the Swiss financial industry has successfully traded and settled tokenized investment products. The CMTA was supported by representatives of the Swiss regulated stock exchange BX Swiss, the banks Credit Suisse, Vontobel, UBS and Pictet, the law firms Homburger and Lenz & Staehelin, the crypto startup METACO, the digital finance specialist targens and asset manager Taurus.

Under the proof of concept, Vontobel and Pictet each issued an actively managed equity certificate representing a basket of equities, while Credit Suisse issued a structured note. These effects were associated with digital standard tokens recorded on a public Ethereum test blockchain and these securities then traded on the platform of BX Swiss in francs. These trades were settled through a computer protocol developed by the CMTA, a so-called smart contract, .

According to a press release from the CMTA, the three processes of the proof of concept - issuance, trading and settlement - took place within hours, whereas in a traditional financial environment they take days. This is currently not achievable with traditional infrastructures, explains Steve Blanchet at Pictet.

Time is saved because the parties are no longer required to guarantee a transaction by sending tokens or money to the exchange before trading, as Matthias Müller from BX Swiss outlined. For Anna-Naomi Bandi-Lang from UBS Investment Bank, the CMTA’s proof of concept demonstrates the ability to trade tokenized products in major currencies and through regulated trading venues.

Jacques Iffland, Chairman of the CMTA, says this “groundbreaking mechanism” will “enable the industry to increase efficiency, simplify cross-border settlement and improve the quality of service. And customers will benefit from the efficiency gains”.