The Citi and Six Digital Exchange (SDX) bank giant, the digital arm centered on the assets of the main stock market of Switzerland, joins to token the actions that are not negotiated publicly in a movement to rationalize a market of $ 75 billion that is full of PDF and paper documents.
CITI will act as custodian and emitter agent for tokenized versions of the late stage, the actions prior to the OPI on the Central Securities Deposit (CSD) platform based on Blockchain (CSD) of SDX, the companies said on Tuesday.
Citi said the platform, which is expected to be presented in the third quarter, will exclude US investors, but otherwise it is global with an initial approach in Switzerland, Singapore and other parts of Asia.
Private shares in high growth and backed companies by companies are a large and attractive subset of an alternative asset class that is valued in the billions of dollars.
Companies with valuations of one billion dollars and more remain private for a longer time, since market conditions dictate delays in OPIs for many. That means that companies are looking for secondary markets to help investors and employees obtain liquidity. But there is an access problem, and transactions themselves are manual and cumbersome.
“The most notable characteristic of private markets is that there is no infrastructure, at least nothing scalable,” said Nisha Southern, leading digital asset solutions in Citi Ventures, in an interview.
Investors generally face a discouraging set of PDF and paper documents to pass, and the solution of a transaction can take five to eight weeks, a process that must be repeated when the investor wants to get out of the position, Southern explained.
“These investments are also hindered by the fact that they do not flow in the statements of wealth of investors such as other public values. Rather, they end up encapsulated in PDF or paper documents or on other platforms,” he said.
Although the last years have seen many traditional financial institutions that analyze the token of real world assets, the first days of this trend saw a lot of attention focused on private markets enabled for blockchain, but with little really delivered.
The SDX CEO, David Newns, said that many hopeful web projects, which saw Blockchain Rails as a way to rationalize obsolete processes and allow easy access and distribution for private markets, faced regulatory obstacles.
“There is a very mature digital security regulatory environment in Switzerland, where we have been doing this now since 2021,” Newns said in an interview. “That is not the case elsewhere. Technology may have seemed that all challenges could address, but problems around distribution, maintenance of the instrument and what this instrument legally represents from an investment perspective did not really resolve.”
The SDX Blockchain -based securities deposit is based on the distributed accounting technology CORDA DE R3. Investors get access through the legal construction of dematerialized values in Switzerland, through their corridor and custodian, said Newns.
“It means effectively, they appear in their bank account in the same way as normal security,” he said. “It does not require that you, as a investor, do something special to access these investment instruments.”
The announcement also marks Citi becoming a custodian in SDX, a movement that reflects the bank’s strategy to provide customers access to new digital asset markets worldwide, including private market assets, said Nadine Teychenne, global head of digital assets, investor services and services of Issueristas de Citi.
“This is part of a project united in multiple businesses in Citi,” Teychenne said in an interview.
The Sygnum digital asset banking group and SBI digital markets of the Singapore -based financial institution will help with access to the previous actions to the Latin OPI that CITI will bring to the SDX platform, according to a press release.
Read more: Citigroup presents Token services for institutional clients
