{"id":4801,"date":"2023-11-27T01:01:11","date_gmt":"2023-11-26T23:01:11","guid":{"rendered":"https:\/\/www.dhcab.com\/?p=4801"},"modified":"2023-11-27T01:01:11","modified_gmt":"2023-11-26T23:01:11","slug":"canton-of-zurich-issues-digital-bond-settled-with-wholesale-cbdc","status":"publish","type":"post","link":"https:\/\/www.dhcab.com\/?p=4801","title":{"rendered":"Canton of Zurich issues digital bond settled with wholesale CBDC"},"content":{"rendered":"<div class=\"postie-post\">\n<div>\n<div dir=\"auto\">On Monday the\u00a0Canton of Zurich\u00a0issued a CHF 100 million ($113m) digital bond via the SIX Digital Exchange (SDX). The most distinctive aspect is the transaction settles using a wholesale central bank digital currency (wholesale CBDC) issued by the Swiss National Bank (SNB). Zurich\u2019s digital bond has an 11 year term and a coupon of 1.45%.<br \/>The joint lead managers on the issuance were Z\u00fcrcher Kantonalbank,\u00a0UBS\u00a0and Raiffeisen Switzerland. Z\u00fcrcher and UBS were announced as part of the\u00a0CBDC pilot earlier this month, but Raiffeisen was not.<br \/>A Zurich spokesperson confirmed that wholesale CBDC settlement takes place on December 1 and only for the two pilot banks. Raiffeisen and the Canton of Zurich will receive conventional Swiss francs, not wholesale CBDC. At that point, the bond will be listed on both the SIX Digital Exchange and the main SIX Swiss Exchange.<br \/>There have been plenty of\u00a0wholesale CBDC\u00a0trials. Two things are distinctive about this pilot. Firstly, the SNB is allowing the use of a live wholesale CBDC over an extended timeframe. Secondly, the SDX platform on which the SNB issues the CBDC is not a test platform. It is the same production platform that SDX has used for issuing tokenized Swiss francs used for previous SDX settlements.\u00a0\u00a0<br \/>Meanwhile, in February the\u00a0City of Lugano\u00a0issued a CHF 100 million tokenized bond via SDX with investors able to invest via the SDX central securities depository (CSD) or the conventional SIS CSD. Enabling the use of the SIS CSD means that investors don\u2019t need to be up to speed with DLT and hence significantly improves liquidity. It was the first digital bond to qualify for SNB\u2019s repo.<br \/>Zurich confirmed it is similar, subject to the repo approval by the central bank, but it expects to qualify as HQLA Level 1. Additionally, it expects an S&amp;P issuance rating of AAA.<\/p>\n<p>How does settlement work given there are two CSDs?<\/p>\n<p>One point of curiosity is how it\u2019s possible to support settlement on both SIS (T+2 settlement) and SDX (T0) given the different settlement timeframes. The two CSDs are integrated, but because the bonds are natively digital, the SDX CSD is the primary registry.<br \/>Exchange trades executed on one exchange cannot settle on the other. Any trade executed on the SIX Digital Exchange settles atomically via the SDX CSD. On-exchange trades executed via the main SIX stock exchange settle in two days via the SIS CSD using x-clear, SIX\u2019s pan-European central counterparty. We\u2019re guessing at the two day point, SDX\u2019s blockchain logs the change in real time. Over the counter trades can settle on either CSD.<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>On Monday the\u00a0Canton of Zurich\u00a0issued a CHF 100 million ($113m) digital bond via the SIX Digital Exchange (SDX). The most distinctive aspect is the transaction settles using a wholesale central bank digital currency (wholesale CBDC) issued by the Swiss National Bank (SNB). Zurich\u2019s digital bond has an 11 year term and a coupon of 1.45%.The [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4802,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":["post-4801","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-issues"],"_links":{"self":[{"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/posts\/4801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4801"}],"version-history":[{"count":0,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/posts\/4801\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=\/wp\/v2\/media\/4802"}],"wp:attachment":[{"href":"https:\/\/www.dhcab.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.dhcab.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}