B-2-B-2-C Business Model
SDX is purely focusing on a B2B business model. Operating as a fully regulated financial market infrastructure (FMI) encompassing an exchange and a centralised securities depository (CSD), our clients have to fulfil certain criteria to obtain direct membership of SDX.
SDX members are regulated financial services companies with a minimum requirement of a FINMA securities dealer's license or equivalent.
With our approach, the relationship between SDX as the market infrastructure, its members and end investors remains unchanged. However, the new technology underpinning infrastructure brings about significant - and valuable - change.
The most fundamental of these changes is that trading and settlement will no longer be separated. Instead, they will operate in the same cycle. We call this riskless trading.
Riskless Trading effectively guarantees that every matched order (execution) is settled. Riskless trading is made possible through atomic settlement on the SDX system. We call it atomic because both legs of a transaction (delivery and payment) happen simultaneously. In sub-second timeframes. This makes it a single event on a ledger where trade execution equals settlement finality.
Riskless Trading effectively means that there is no need to mitigate risk. Sub-second timeframes means that there is no capital exposure of days (as in the case of T+2, for example), and no need for clearing as a function.
- A basis to model and automate complex securities
- Access both primary and secondary markets
- Riskless trading due to atomic settlement
- Every counterparty becomes a safe counterparty
- Digital assets with full end-to-end ownership can be autonomously serviced
- Corporate event processing is simplified and immediate
- Using enterprise-grade hardware security modules
- Customisable business rules
- Members can operate their own private trading networks
The core components of the future digital marketplace are digital assets, digital cash and an immutable link between the assets, the cash and ownership.
Digital assets are smart contracts in a trusted repository. All asset properties are captured directly in the token – one single source of truth. This allows for automated processing with asset servicing logic implemented into the asset. The commercial opportunity is to tokenise new asset classes (e.g. difficult to trade assets or non-bankable assets)
SDX' member banks will be able to settle their trades and other obligations against tokenised CHF within SDX. To facilitate this, SDX would accept CHF payments from member banks in central bank money and issue equivalent tokenised CHF in SDX. The value of tokenised CHF would be pegged 1:1 with CHF at all times.
A trade is the delivery of an asset in exchange for a payment. Trading today rarely includes details of the beneficial owner and thus after a market trade (on exchange) there follows allocation and reconciliation tasks. The ecosystem design will provide for secure storage of client data, and thus beneficial owner information can be included on orders and is also used for asset servicing automation. The beneficial owner data must be secure data to the relevant member, however, the link between asset and owner in a digital world allows for real-time information at client holding level.
SDX will provide the infrastructure to create a new ecosystem with existing SIX members and new customers. The SDX model to enable asset trading and servicing will provide mutually beneficial results to all parties involved, whether the trade is of a listed product on the SDX exchange or a private transaction between two SDX members. The idea is to create a collection of flexible services that can be adapted to the ever-changing needs of asset management.