SDX And Pictet Complete Pilot To Tokenize And Fractionalize Bonds

HomeNews* SIX Digital Exchange and Banque Pictet et Cie completed a pilot project to tokenize corporate bonds.

• The pilot allows investors to hold fractional portions of bonds in individual portfolios managed by Pictet Asset Management.
• This process enables more customization and diversification in client portfolios through fractionalized bonds.
• The initiative used tokenized versions of existing bonds, not just new digital bonds, expanding customization options.
• The approach follows previous and global trials in tokenization, including past efforts by Pictet and comparable projects by JP Morgan and Apollo Global. SIX Digital Exchange (SDX) and Banque Pictet et Cie recently finished a pilot program to tokenize corporate bonds. The project lets investors hold fractions of bonds in portfolios managed by Pictet Asset Management. The program took place to improve customization and diversification for clients.

• Advertisement - The move allows investors to allocate smaller, fractional pieces of bonds, rather than requiring full bond purchases. According to SDX, their platform is already used for digital bond issuances. The latest step focuses on converting traditional bonds into digital tokens, both in Swiss francs and euros, for clients’ portfolios. The tokenization helps rebalance portfolios automatically.

“A new and innovative use case for tokenised trading of securities that opens up for customisation at scale,” said Olivier Ginguené, Chief Investment Officer Multi Asset & Quantitative Investment at Pictet Asset Management. The firm has tried tokenization before. In 2022, Pictet partnered with Credit Suisse and used a public blockchain, while the current project relies on SDX’s private ledger technology powered by R3’s Corda.

Other projects globally are exploring similar techniques. In 2023, JP Morgan and Apollo Global ran tests under Singapore’s Project Guardian. Their work looked at using tokenization to help wealth managers make portfolios more flexible, but they focused on alternative funds instead of corporate bonds.

Tokenization refers to turning traditional financial securities into digital tokens that can be traded or divided into smaller parts. With the SDX and Pictet project, the new approach now applies to both digital bonds and tokenized forms of regular bonds, offering more possibilities for client-focused investing.

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