Tokenised Shares in Switzerland. Dry Run Completed with Swissquote, Vontobel and other Fintech Banks

The Capital Markets and Technology Association (CMTA), an independent Swiss association, has successfully carried out a full-scale test of decentralised capital market infrastructures using the distributed ledger technology (DLT) for the issuance and trading of securities.

The banks involved in the dry run were SEBA Bank, Sygnum Bank, Arab Bank (Switzerland), Hypothekarbank Lenzburg and Vontobel.  The banks acquired tokenised shares issued by a Geneva-based corporation (société anonyme / Aktiengesellschaft) and traded these securities both over-the-counter (OTC) and on Swissquote Bank’s digital asset trading platform. The trades were settled either in Swiss francs or with DCHF, Sygnum’s CHF-pegged settlement token.

The relevant tokenised shares were recorded on the Ethereum blockchain using a so-called “CMTA-20” smart contract, an open-source code developed by CMTA and specifically designed for the tokenisation of equity securities.

The tokenisation and custody infrastructure was provided to the issuer, the banks mentioned above, and the test trading platform by Swissquote Bank. The CHF-pegged settlement token was provided by Sygnum Bank while Lenz & Staehelin advised on the issuance of the shares and the legal steps of the tokenisation process.

PricewaterhouseCoopers Ltd established a report documenting the transactions that were carried out.

Marc Bürki

Marc Bürki, CEO at Swissquote Bank, explains:

“A number of Swiss banks successfully deposited, traded and withdrew security tokens, representing shares, on our new trading platform, using blockchain settlement. Swissquote Bank is thrilled to have played a key role in this ground-breaking development for the Swiss  blockchain world.”

Ariel Ben Hattar

Ariel Ben Hattar, Executive Committee Secretary at the CMTA and member of the capital markets practice of Lenz & Staehelin, adds:

“Our dry run is proof that digital assets and traditional finance are compatible. Not only is it remarkably simple for a company to issue tokenised shares, but it is also possible today to hold and trade them through accounts held with professional custodians.”