SDX: Status Quo & Outlook

Introduction to SIX Digital Exchange AG

Inmaculada Navas

50. SCOM
23 June 2022
 Agenda

1. Introduction: From FMI to DMI

2. SDX Digital Asset Platform and Service Offering
3. Outlook
4. Q&A

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01 Introduction: From FMI to DMI

1. Introduction: From
FMI to DMI

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 01 Introduction: From FMI to DMI

SIX Digital Exchange sets the standard for digital assets, embedded
in the existing financial market infrastructure environment

Our core pillars

Since it was founded in 2018, SIX Digital Exchange (SDX) is an integral
part of SIX Group, the infrastructure operator of the Swiss and Spanish
financial centers which is owned by 120 Swiss banks1. Token

Fully regulated Digital assets –

In addition to market access, SDX offers issuing, trading and custody of Tokenized cash
digital assets based on innovative distributed ledger technology (DLT). SDX as the fully regulated The market where all value is
source of trust. listed, exchanged and stored.
The company operates the digital market infrastructure for digital
assets with 120+ employees under a full FINMA license in the form of
an integrated central securities depository and stock exchange1.

SIX Group’s high security and reputational standards are a key element
in the issuance, exchange and custody of high-quality assets within a Full value chain B2B model
regulated framework. Purely focused on business
From issuance, via transfer
clients on a permissioned chain.
and settlement to custody.

1) As of March 2022
2) [Link]

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02 SDX Digital Asset Platform and Service Offering

2. SDX Digital Asset

Platform and Service
Offering

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 02 SDX Digital Asset Platform and Service Offering

SDX aims at simplifying the value chain, drive efficiency gains and
pave the way for institutional digital assets
Digital Market Infrastructure (DMI) Atomic Trading & Settlement
covering the entire value chain capability, making a Central DLT-based technology
(e2e) Clearing Counterparty obsolete

Listing Trading Settlement Custody Fiat Token

SDX Trading SIX Digital Exchange

Listing Trading Clearing Settlement Custody Payments

SIX Swiss Exchange SIX x-clear SIX SIS SIC

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 02 SDX Digital Asset Platform and Service Offering

We have built a fully integrated stock exchange and CSD

Issuance & Asset Servicing

Atomic Trading
SIX c-clear
& Settlement FIAT Token
Listing & Custody

Trading System same as Centralized orderbook New market model that Market surveillance Market Data publication
SSX1 is using today, connected with supports integrated based on SMARTs, the fully integrated in existing
integrated to DLT2 at distributed ledger trading and atomic system that SER3 and SSX1 SIX Exfeed
matching point. technology to enable settlement based on well is using today
integrated trading know price finding
mechanism

The first regulated CSD to The first company in the Fully tokenized DvP Fully integrated in the First proof of automated
distribute holdings of world integrating settlement on the CSD6 connectivity layer of SIX asset servicing based on
assets based on DLT tokenized CHF backed by layer to enable quick smart assets for bonds
where the members hold deposits at SNB4 to onboarding of existing and equities
the assets under enable DvP5 exchange clients
their private key of tokens

1 SIX Swiss Exchange

2 Distributed Ledger Technology
3 SIX Exchange Regulation
4 Swiss National Bank
5 Delivery-vs-Payment
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 02 SDX Digital Asset Platform and Service Offering

SDX as known and trusted partner to build a Digital Asset

Ecosystem and explore new opportunities
Lifecycle Issuance & Listing Atomic Trading & Settlement Asset Servicing & Custody

▪ Digital assets
− smart contracts represent a single source of truth for securities (intermediated securities are being created based on simple
uncertificated securities
− tokenized currency is the foundation for value exchange (CHF for MVP)

▪ Listing ▪ Atomic trading and settlement ▪ Asset servicing logic can be performed
− instant and simple process − eliminates market-risk until end-clients’ custody accounts
− a basis to model and automate − removing the need for a CCP ▪ Simplify corporate event handling such
complex securities ▪ Peer to peer transactions as coupon and dividend payments
− access both primary and − increased efficiency and risk ▪ Relevant transaction details are known
secondary markets reduction on need-to-know basis

High level
Revenue Revenue Cost and Risk Cost and Risk
impact

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 02 SDX Digital Asset Platform and Service Offering

SDX’s initial offering focuses on securities tokens settled and

custodied on a private, decentralized infrastructure
SDX initial offering includes digital bonds and equities Comment

Digital assets ▪ Digital assets are investable stores of value that can be traded on
digital platforms
▪ Digital tokens include security tokens and utility tokens
‒ Security tokens represent the ownership of assets such as equity, debt, real-
Asset tokens Utility tokens Payment tokens estate, commodities or exotic asset classes (e.g., collectables, patents, IP)
‒ Utility tokens represent future access to a company’s product or service
▪ Digital currencies include cryptocurrencies and fiat tokens
Crypto ‒ CBDC’s are backed or issued by a government (as issued by central bank) –
“Stable coins” CBDC increasing number of central banks involved with CBDC research and
currencies
development

Examples: ‒ Crypto currencies are independent digital currency with no underlying asset
and no central regulating body (value established through supply and
Digital Bonds/Equites TaelPay Bitcoin SDX TCHF1 Project Helvetia
demand) – representing majority share of all digital assets today

1) Tokenized commercial bank money

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 02 SDX Digital Asset Platform and Service Offering

Collaborating with BIS Innovation Hub and Central Banks to lay the
foundation for settling tokenized assets in wholesale CBDC
Helvetia Phase I (completed in December 2021)
▪ Issuing a wholesale CBDC onto a distributed digital asset platform;

▪ and linking the digital asset platform to the existing wholesale payment system (SIC)

▪ The initiative demonstrated the feasibility and legal robustness of both alternatives

Helvetia Phase II (completed in January 2022)

▪ Integration of wholesale CBDC (wCBDC) in core banking systems

▪ Settlement of interbank, cross-border and monetary policy transaction using wCBDC

▪ Legal assessment of solution design and considerations on alternative settlement options

Jura (completed in December 2021)

▪ Settlement of cross-border and cross-currency transactions in wCBDC on a single multilateral platform

▪ Emphasis on governance, including controls for central banks, when issuing wCBDC on a platform that is owned
and operated by a third-party

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03 Outlook

3. Outlook

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 03 Outlook

New Opportunities: Adapting the evolving developments in the digital

asset industry (incl. challenges)
A. Client ▪ Major capital markets clients are now looking beyond PoCs
demand ▪ Buy-side and many CH institutions positioned as fast followers

▪ Tokenization has positive momentum in some bankable

B. Asset class & assets, while non-bankable asset space is still nascent
product trends ▪ Both areas open up opportunities for SDX Market dynamic re-
confirm SDX’s early
▪ Greatest threat comes from incumbent players defending/ mover positioning
Digital asset C. Competitive
expanding core business - new players focus on crypto & investment to
ecosystem landscape
▪ SDX maintains a well-balanced position build the next
dynamics
opportunities generation
financial market
▪ Globally, regulators are adapting existing rules & regulations
D. Regulatory & ecosystem
for DLT at different paces - overall slower than expected
market
▪ CH remaining at forefront putting SDX still in a strong
developments
position

▪ Maturity of blockchain / DLT is still in a developmental stage

E. Technology
▪ Privately hosted DLT infrastructure (e.g. SDX) better suited
trends
to support “regulated” products/solutions

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 03 Outlook

SDX’s 3 pillars strategy aims at capitalizing

on market-driven opportunities
Exploit Explore
Build
1. Digital Securities 2. Crypto 3. Non-Traditional Assets /
Fixed Income & Equity & Others Alternatives

SDX as the leading regulated SDX as crypto provider across the value SDX as catalyst for DLT-based new
marketplace for digital securities & chain: liquidity access, risk management business models for non-traditional
the future SIX Group infrastructure tools, custody and ancillary services asset

Institutional client base: banks, Institutional client base: banks, market Institutional & corporate client
securities firms, issuers makers, crypto brokers base, issuers

Swiss regulated, global investor and Swiss springboard, global outreach1 Swiss springboard, global outreach1
members outreach1

Information & Insight / ESG

1. Subject to relevant regulations Digital Securities: intermediated securities; Crypto: Crypto currencies, e.g. BTC; Non-Traditional Assets: non-bankable & non-intermediated assets that might be
traded but lack definite and standardized infrastructure

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 Questions
and Answers

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Disclaimer
This material has been prepared by SDX Digital Exchange AG (hereafter "SDX") for the exclusive use of the persons to whom SDX
delivers this material. This material or any of its content is not to be construed as a binding agreement, recommendation,
investment advice, solicitation, invitation or offer to buy or sell financial information, products, solutions or services. It is solely for
information purposes and is subject to change without notice at any time. SDX is under no obligation to update, revise or keep
current the content of this material. No representation, warranty, guarantee or undertaking – express or implied – is or will be given
by SDX as to the accuracy, completeness, sufficiency, suitability or reliability of the content of this material. Neither SDX nor any of
its directors, officers, employees, representatives or agents accept any liability for any loss, damage or injury arising out of or in
relation to this material. This material is property of SDX and may not be printed, copied, reproduced, published, passed on,
disclosed or distributed in any form without the express prior written consent of SDX.

SIX Digital Exchange AG

Pfingstweidstrasse 110
8005 Zürich
Switzerland

© 2022 SIX Digital Exchange AG. All rights reserved.

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