SIX Group AG SDX – SIX Digital Exchange Thomas Zeeb – Head Securities & Exchanges, SIX Group AG Marrakech, 11. April 2019 1
Why Bother? – Trading in Digital Assets • Currently 1800 digital or crypto currencies in the world, traded on 185 “exchanges” (more accurately “brokers”) globally. • There are myriad problems with the current trading and settlement of crypto assets: Exchanges are for the most part completely unregulated Each digital exchange has different protocols for establishing an account and trades different crypto currencies. The link to “real” money is tenuous Fees are very high, up to 400 basis points per transaction Portfolio and Tax Reporting is non-existent An asset “holding” is defined by an encryption key which, if lost, loses the entitlement and the ability to sell the asset completely Most markets have a lack of real liquidity, eg the ability to convert the digital currency back into real money Irrespective of Cryptocurrency sustainability and validity as an asset class or payment vehicle, Digitalisation of Assets is inevitable Page 2 28.03.2019
I Why bother? - Competitive threats start to materialize “New” market players Impact of new competitors e.g. Binance, Coinbase entering the market Native Confirmation of going-in 1 tokens hypothesis Direct competitive move 2 of Swisscom against SIX FMIs and brokers e.g. NYSE, Nasdaq, GS, SIX, Tokenization CSD’s of assets + Competitive moves 3 full value chain on against incumbent banks Traditional distributed ledger Assets Traditional Model Digital Model 3 New competitors entering the market
Overview of Traditional and Digital Business Models T+2 SIS Exchange (SWX) X-Clear - Settlement - IPOs/Listing - Clearing Traditional SNB/ - Custody - Trading - Netting Model SIC - Asset Servicing - Index - Risk Reporting generation Client Best Execution Collateral & Capital Collateral & Capital Implications Resulting Business Instant Settlement Models SDX 2019 SDX - IDO Standard - Settlement - IDO´s/Listings - Tokenization of - Custody/ Digital Asset SNB/ - Trading Secure Storage (SIX) Assets SIC Model - Index - Asset Servicing - Native Tokens Generation On one Client Benefits Reduced Risk, Reduced Costs, Increased Liquidity and AuM for SIX Clients Infrastructure 4
SDX will provide the infrastructure required to create a new digital asset ecosystem SECOM integration for tokenization of SIC SIS existing assets SIC integration for tokenization of Tokenization Matching Settlement Key Mgmt CHF Swiss Franc Acting as gatekeeper and SDX ecosystem for digital value exchange notary Client DLT Node with restricted information Regulator DLT Node with full information SDX Business Network Business Network 1 Business Network 2 5
Core Components of SDX IT Landscape: Overview Trading System Wallet Solution Wallet Solution Wallet Solution Permissioned integrated in and HSM for and HSM for 3 rd and HSM for Component DLT Solution DLT at order Permissioned Party Non-Bankable matching point DLT Blockchains Assets Non-bankable Products Native tokens & tokenized assets assets Centralized Distributed Custody for Enabled Settlement and Custody for non- Matching Custody for SDX assets living functionality Asset Servicing bankable assets outside the SDX Network Network 6
User Group support for validation: Key Deliverables • New Services Use Case Deliverables Top Down Strategy (Atomic Settlement and • POC Technical Core (Atomic Swaps, Smart Assets) Smart Assets,…) Discussions to derive • SDX Roadmap • Strategy Pipeline for Phases 1 and 2 • MVP Phase 1 and MVP Phase 2 Deliverables • Business Model • Specific MVP 1 Use Cases • Identified Business Building Blocks • Business Case • Business Architecture on Equity and Warrants • System Architecture • Identify MVP 2 for Phase 2 • Products/Markets Rollout Pipeline • TOM Functional Organization • Top Down Roadmap User Group • Top Down Phase 1 and 2 MVP incl. Pipeline • Strategy • Top Down Building Blocks Validation • Business Model • Business Case SDX Management Team PI2 • Business Architecture Pipeline of agreed Building Blocks Validation • Technical/System Architecture BC/BA/TA per Market/Product/Client • Capex • Bottom Up Use Case Business cases • POC Technical Core Building Building Block N Block Z Building Block A Building • TOM Functional Block M • Building Blocks (BC, BA and SA per MVP 2 MVP 1 Organization Product/Market/Client) • All other PI2 Activities • Bottom Up Phase 1 and 2 MVP incl. Pipeline • Bottom up Roadmap Q4 2020 Phase 2 Q1 2020 Phase 1 Bottom Up Capabilities SDX Roadmap 7
Key Program Milestones defined July 2019 Lab opening: Demo environment of SDX Core Exchange Platform September 2019 Start Pilot: technical end-to-end testing (Native Digital, IDO) Q4 2019 Plan first IDO’s on SDX Platform Q1 2020 Phase 1 go-live: Tokenization of new native digital assets & IDO’s Later in 2020 (subject to further regulatory approvals) Phase 2 go-live: Tokenization of bankable and non-bankable assets (scope & prioritization to be defined with user group) 8
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