09 Apr 2019
The Gibraltar Stock Exchange (GSX) is set to become among the world's first stock exchanges to offer the listing services of digital debt securities and digital funds. The GSX will today begin listing of these new products, known as ‘digital’, ‘smart’ or ‘tokenised’ securities, such as Corporate Bonds, Convertible Bonds, Asset Backed Securities, Derivative Securities, Open-Ended Funds, Closed-Ended Funds, utilising Distributed Ledger Technology (DLT), under its current licensing permissions, on the GSX Global Market.
A New Era of Blockchain Powered Finance
Since the inception of the regulated and insured Gibraltar Blockchain Exchange (GBX), the GSX has always maintained its position to be one of the first traditional stock exchange’s to break into the innovative prospects of blockchain technology.
As part of a phased approach in 2017, the GSX began working towards the aim of being a DLT enabled exchange for conventional securities, recognising the tremendous potential presented by the nascent technology. Following the recent successful deployment of the ‘GSX Prototype demo bond’, using the STACS Network, (created by Hashstacs Inc, a GSX Group joint venture), the GSX will offer companies the unique opportunity to list digital representations of funds and debt on the blockchain.
The GSX, applying DLT, will be able to open up greater liquidity pools, making illiquid assets more accessible, and set the foundations to democratise the capital markets, that have gone largely unchanged in technology for decades. With the STACS Network, the legacy systems of T+3 will become significantly reduced, with an immutable ledger for greater transparency, fully auditable smart contracts, regulatory oversight, efficient settlement, and high efficiency, low-cost opportunities for issuers.
GSX Global Market is a practical listing venue option for issuers offering reduced timelines and listing costs, with lighter reporting and disclosure framework than the GSX Main Market. A major benefit for debt issuers with securities listed on the GSX Global Market is that they are not obliged to withhold tax on coupons under UK law. This is because the GSX Global Market is operated by a recognised stock exchange (the GSX Main Market) regulated in an EEA territory. Nick Cowan, CEO of the GSX Group, commented on the announcement, stating:
“This is a historic moment for GSX, we have worked incredibly hard to reach this point, and we are now at the precipice of a truly transformational period for the capital markets. We now have an unparalleled opportunity for the GSX to become a frontrunner in the emerging digital securities market. We’re pioneering meaningful change, for the betterment of the global financial industry, we have come so far already, and this is only just the beginning.”
A New Listing Paradigm
Through STACS Network, via smart contracts, the GSX will have the ability to launch digital debt securities and fund listings, which can track selling reports, enable parameters on eligibility and selling restrictions, and program the distribution of payments, coupons or dividends. The global interoperability of the STACS Network, combined with the institutional-grade best practices by an EU based regulated exchange will empower issuers and offers greater opportunities of adoption to redefine the current capital markets model.
GSX: Part of a Fintech Ecosystem
As part of the GSX Group ecosystem, the GSX is perfectly placed to provide issuers with a ‘one stop shop solution’ in digital securities listing. Through Hashstacs Inc., issuers can gain access to all the benefits of DLT, without the need for extensive in-house developer costs, the GSX does the ‘heavy lifting’ with programming services of smart contract customisations for issuers, and enterprise wallet custody solutions. The GSX Group also boasts an experienced fund administrator in digital assets, with incorporation services, further providing opportunities for issuers.
If you have the ambition to become a GSX member firm or a potential issuer aiming to utilise blockchain-based digital securities on a regulated stock exchange, please provide your credentials and deal specifics, visit HERE.