SIX has reportedly launched the Digital Collateral Service (DCS), permitting financial institutions to post selected cryptocurrency assets as collateral alongside traditional collateral.
The product offers a solution through which clients are able to manage traditional securities as well as cryptocurrency based collateral.
Firms managing bonds and bitcoin, for instance, can now post both as collateral to cover “a single exposure.”
This will now aim to simplify operations for traders and their counterparts significantly, enhancing “portfolio management efficiency and minimizing counterparty risk.”
SIX has developed this service by combining and leveraging “expertise from different areas in its international custody business and SDX.”
Beyond providing a holistic collateral management platform, DCS 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.”
David Newns, Head SDX, said:
“The role of cryptocurrencies in collateral management will become increasingly important. Our new and fully integrated solution empowers product issuers, traders, brokers, and market makers to optimize their collateral usage, whether it’s crypto or traditional securities, with built-in risk management safeguards. This allows financial institutions to embrace crypto collateral on a larger scale.”
Christian Geiger, Head Clients & Products Securities Finance, SIX, added:
“Building on our role as a trusted financial market infrastructure and leveraging the flexibility of our state-of-the-art Triparty Agent, we are thrilled to expand our offerings to include cryptocurrencies as a new asset class for collateralization. With the growing institutional appetite for digital assets, we are committed to meeting the needs of this highly risk-conscious investor segment through our established and reliable services.”
As covered, SIX provides and operates stable and efficient infrastructure for the Swiss and Spanish financial centers, thus “ensuring access to the capital markets and the flow of information and money between financial market players.”
As a provider of financial information, SIX says that it delivers “high-quality reference, pricing, corporate actions, and ESG data and provides regulatory services and indices to clients around the world.”
The company is owned by its users (more than 120 banks) with “a workforce of 4,160 employees and a presence in 19 countries.”