The new Digital Collateral Service targets clients that need to manage traditional securities and cryptocurrency collateral.
Officials at SIX have announced that their new Digital Collateral Service (DCS) will help financial institutions “post selected cryptocurrency assets as collateral alongside traditional collateral.”
The DCS targets clients that need to “manage traditional securities and cryptocurrency collateral,” according to the SIX announcement. “Firms managing both bonds and bitcoin, for example, can now post both as collateral to cover a single exposure.”
The new offering is intended to help firms “simplify operations for traders and their counterparts significantly, enhancing portfolio management efficiency and minimizing counterparty risk,” officials say. “SIX has developed this service by combining and leveraging expertise from different areas in its international custody business and SDX [SIX Digital Exchange].”
In fact, the DCS offering “leverages the crypto custody infrastructure of SDX, delivering users enhanced safeguarding mechanisms. The default protection for collateral held in this type of account structure adds a layer of security that many institutional investors have been seeking to justify greater participation in institutional cryptocurrency trading,” officials say.
The supported crypto-based collateral can be used in SIX’s triparty collateral management service for instruments such as crypto-based exchange-traded products (ETPs). However, the new support does not mean that the SIX Swiss Exchange can serve as a trading venue that accepts crypto-based collateral, according to SIX officials.
In addition to the Swiss Exchange, SIX operates exchanges for Spanish financial centers and is a global provider of financial information, including reference, pricing, corporate actions, and ESG data. It also offers regulatory services and indices to clients around the world.
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