Thank you Hello I'm Dominic cobson co-founder of future of finance my guest today is massimobuti head of equity at sdx the digital asset exchange and Central Security suppositories owned by the six Swiss exchange and post-trade Services Group thanks for joining us uh thank you very much Dominic now your background is in exchangeTraded derivatives how do you think that's colored your approach to digital securities um more than colored I think that I can draw some parallels uh between uh the world of derivatives and the world of of digital Securities uh one is clearly Innovation uh derivatives have been at the Forefront of financial InnovationFor the best part of 20 years and that has given me a certain awareness of how to deal and how to cope sometimes with Innovation but but also how to uh how to always look at the development of products and services on a specific asset class or on a specific Market as aContinuous innovation process and I think that that is very useful because that is the way that basically DLT and and dlt-based Technologies operate uh discontinue cycles of of a rapid development and and change I think that the the other thing is that innovation in derivatives has always been seen as aAs a way to improve efficiency and and uh I don't want to be reductive but we always saw efficiency in in expressed into into areas uh better better operations better risk management improved margins and I think that uh looking at the at the Innovation spaceIn in the DLT world that is also a the same the same guiding principle as you say uh in the exchange rate at derivatives markets you're innovating in pursuit of efficiency but one of the other things that happens in exchange into British Markets you're always bringing new products new contracts toThe marketplace and you need to generate liquidity in those has your experience of doing that in the derivatives markets uh taught you some lessons about how to overcome one of the big challenges in in say tokenized Securities of generating liquidity uh yes I think that again uh um thereAre parallels in the two that can be that that can be adopted uh uh and some definitely some of the Lessons Learned in uh in the Realtors markets especially in the more customized OTC exotic space apply to uh to the current DLT markets uh if you look at the liquidity Spectrum in derivativesAgain you go from uh incredibly um incredibly liquid uh exchange traded contracts with Central Central clearing ccps uh to OTC bilateral trades that are very nice customized in and the liquidity is uh sometimes exists only because uh two counterparts are willing to tradeUh if you look at where we are at uh in in the development of liquidity in in dlt-based assets we are very much on the same on a different scale but on the same uh on the same Spectrum where you have relatively uh liquid assets like you know cryptocurity the topCryptocurrencies to very uh very customized if you want uh products in the defy space and where the liquidity is expressed in a completely different way from the central order book uh in defy strictly speaking in the liquidity pool there isn't even a concept of of a central order book it doesn't exist soUh when you look at uh the way or to see derivatives work exactly the same thing there is no Center order book price Discovery is uh is is carried out in a completely different way it's more based on price formation valuation uh and the same thing happens in in DLT so I thinkThat there are a lot of lessons that can guide Market practitioners when looking at how to structure and develop liquidity in in dlt-based Securities now I don't want to make this interview entirely about what's going on in the derivatives markets but um do you see things happening in derivatives markets which are relevantOr maybe interesting Parallels for what we're trying to do in the Securities tokens markets I'm I'm thinking here of there's been talk of replacing Central cannabolic hearing houses for example by kind of peer-to-peer collateralization and you do see you have seen that happening in the D5 markets it is I'mI'm whether it's a good thing or a bad thing at it and it's one of the things which FTX under under Sam bankman freed was was looking at doing um do you do you see developments like that as having legs as we move away from FTX and maybe start to rethink how D5Will work uh well I guess that uh when we are looking at defy and uh for example as you mentioned uh collateral collateralization and uh centralized risk uh pools as expressed in the ccps uh if you look at defy it runs completely counter to that uh centralization it's been builtExplicitly not to have that character as a that that Central risk pools that are managed centrally by by the members either by mutualizing risk or uh or sharing or sharing risk mitigation processes um however uh as you mentioned uh I think that uh there are uh there areTools in places in the centralized uh Finance world that could benefit the development of uh not if not Hybrid models but at least they could benefit the convergence between defy and Central Trad Phi in that respect and here the uh the the operating Ward is Convergence and we will talk about this probablyLater in the interview um uh the the fmis I think play a prime role in helping that convergence and we're seeing that uh in uh in uh in the FMI World happening via uh ccps and csds adopting uh DLT Technologies to provide better tools um but also to provide a a bridge intoThe defy in the defy space I think that uh the uh some of these of these Technologies and these techniques and these protocols could help greatly defy and the access to reduce the need for uh collateral when when transacting on a P2P basis they could help uh uh better understanding uh cross protocolUm requirements in terms of uh margins and and collateral um I think that there are some interesting pocs that have been carried out across the industry uh some of them I think can really lead the way to shortering uh collateral chains and and facilitate risk compressionSo uh I think that again to answer your question is a is a convergence process where I think uh the the uh the Two Worlds will will meet okay it sounds like you see efficiency gains to be made in collateral and well margin calls in in the industry as wellUm which I'm sure is true now back to the equity markets um you've obviously spent quite a lot of your career in exchanges you've been at London Stock Exchange and uh a nicer urine X as well as now you're at at six have you brought to sex as a result ofThat experience a very clear sense of what digital assets are going to do to or the opportunity they create for uh traditional exchanges and I'm thinking here particularly the fact that traditional exchanges uh have a problem which is globally that IPOs are not um taking place on the same scale asThey used to uh companies are de-listing private Equity is on the rise and even when companies do come to Market they're often most of the money has been taken off the table already by by private Equity Funds so they have a a problem they have obviously a great dataBusiness but they do have a an issue in the at the heart of business can digital assets transform their situation we believe that they can and the reason is that the market you just described has a as an issue which is private markets are always being feeding deals and trades uhInto the uh into the into the public markets but in terms of infrastructure to support scale and and make those markets more accessible private markets are completely underserved they are underserved by fmis in general there have been uh very good attempts to uh to build curate grow and guide uh private companies andSmes over the years uh you mentioned my uh my two previous employers they have very good programs to help uh SME companies uh to um to raise capital in uh in financial markets however if we look at the detail there are always feeders programs aimed at uh ultimately make these companies go publicAs I said the the the trend is against that and uh that has created a lack of support in general from fmis into uh into um for private private markets and helping helping investors and entrepreneurs raising capital and uh they haven't worked uh well in reducing the distance between investors and those CapitalOpportunities so uh private markets require the infrastructure and infrastructure has to be equally um equally robust and equally scalable as it is in public markets and uh and again we have saw we have in my opinion jumped a a generation of innovation in providing services to uhTo private markets so there are an under serviced uh segment of capital markets so now we have this opportunity presented to us as fmis by the technology and DLT almost by coincidence modern and design provides the the uh the possibility to deliver a lot of efficiency and actuallyUh provide infrastructure that is robust and uh and also provides the same efficiencies as I was alluding before in terms espressos in terms of cost reduction better user experience and uh and uh and preservation of margins that the uh the uh the public markets can clearly uh you know there are examplesOf radio of uh of this that are nearly invisible to us there are companies that uh uh go public now uh and you discovered that they've been they've been private for 20 years in those 20 years something must have happened they must have raised Capital somewhere uh they must have uhRe-uh reorganize their uh their uh their investors base reorganize their the cap table they must have issued private bonds perhaps or ask for for loans so all that happened on a bilateral uh uh private way almost uh with a very complex chain of intermediaries in between and yet againUh at the end what you offer to your investor beyond the direct investment in your company is a piece of paper that can't be really used it's not really bankable in in certain terms um is not part of the classic banking world uh simple things like uh ownership chainsUh or or ownership titles are a nightmare to maintain now it strikes me that a uh a ledger-based technology that relies on uh on very simple encrypted records that can can keep that and where you can embed through smart contracts for example which are okay again an innovation within the DLTThat use Smart contracts to automate a lot of the process of the maintenance of these uh of these uh of these uh of the Securities and then make these Securities available in the banking system is a much better mouse trap than what we currently have soI think that the future is uh more usage of DLT and we will see entire uh life cycle maintenance flows um of private Equity is maintained on on DLT systems can I just unravel um a lot of what you've said about about private markets by asking you this onThe one hand what you're saying suggests that the the and this could apply to any Stock Exchange not just a six need to restructure their proposition to the private Equity industry instead of saying well um come and cash out your your investment by by an IPO you're actuallyLooking to change the proposition to them and saying well here is a different technology a different technique um for for funding your your proposition so you're offering something slightly different to private equity and then there's this broader proposition that there are all those private companies out there who may never have taken inPrivate Equity Capital um they never have thought of of an IPO but are raising Capital as you say both debt and equity in forms which are not very liquid and informative they can't really use as collateral for for anything else so you're actually um entering the private Market space atMore than one level if this is bigger than private Equity this is about the whole of the private we manage companies sector right and on a global scale yes it is it is a new proposition is not a uh an enhancement of our of uh of anOld way of think doing things as I said is about creating an ecosystem for private private Capital raise is about uh uh supporting the funding journey of companies um is about providing also liquidity when needed without the necessity to go public providing for example support uh for uhUm options or Phantom shares reward schemes um in in companies uh in incentive um incentive schemes for companies is about providing liquidity for example for uh minority investors who want to uh perhaps monetize a their their stakes in these private companies uh founder investors who want early exitsUm we are creating all this and as I say it's a it's a much larger scale but also it is a thought after uh uh uh um uh um thought through process that that guides and supports and curates the the fundraising activity the financing activities of of companies uhHopefully from pre-seed all the way through to maturity okay well I'll um I'll I'll I'll come back to that that very point about process and what you can do to help these companies but just so I'm absolutely clear here we're not saying to these privately managed companiesWell um you might want to do an IPA but why don't you do an sto instead it's actually much more flexible as a proposition than that there are lots of different uh forms of capital raising instrument which the DLT technology makes possible in a way that conventional equity and debt don't likeSharing net profits or revenues allowing minority groups to to take money off the table and so on that's really what you're saying that's what this that's what the the sdx Focus now on on what a properly called smes is right yes and and I think that uh it's veryImportant to to highlight uh this is that what we're trying to do we're also trying to recycle some some tried and tested processes that work perfectly well but need to be enhanced and and made better through through the technology and to create a completely new propositionFor example one of the things that uh we are looking at uh is exactly the the format our uh our private markets are starting off by uh by doing classical uh bonds and and Equity Capital so shares what the DLT and the DLT law in Switzerland allows us that allowed to doIs for companies to issue intermediate securities um in um in dematerialized form and that helps us to take these dematerialized Securities turn them into the equivalent of a share and digitize them and and and deposit them and transfer them make them make them available for deposit andTransfer on the nodes of our of our costly and custody initial agent members now the uh what you're getting for an intents and purposes is a share in a company but the by the technology and the wrapper underpinning that technology is a b is a dlt-based artifact is a is aQuick a cryptographic an encrypted uh uh entity that is uh that sits on a traditional now traditional DLT uh DLT Network at the moment we're doing that within our own uh our own private private chain we have a Walled Garden it's our own uh private train that runs on ethereum uhAnd we have a uh an implementation provided by Corda for example to to run uh custody and transfer of these assets on our nodes uh and where our um our members maintain maintain the nodes on the network is a permission uh as a permission NetworkBut we see that as a a one way to start transitioning and start building this world where a private private companies can can uh can tap into into a further sources of capital for their development and we're making that Journey relatively simple uh they allThey need is an issuer agent who is one of our members on on uh on our Network that will basically fill in what we call an asset definition form uh and uh and then create a digital asset that is transferable and settleable uh on the uh on our NetworkWe allow uh settlement Atomic settlement we allow we allow DVP or even uh delivery free of payment of these assets the uh the uh the issue agents and the and the banks involved in transactions decide that uh we allow these transactions to be carried out uh bilaterally among counterpartsBut for example we ask the we maintain we maintain processes and checks and balances that you would expect from a from an exchange in terms of of due diligence run on the issues on the issues kyc the kyc is performed by the uh by the members on the network on their clientsSuitability checks and all the uh uh compliance Regulatory and legal checks that are required to maintain uh to maintain these assets um within a regulated a regulated framework now in terms of making these companies investable in the in the way that you have described and you've mentioned thatYou want to repurpose some of the existing intermediary functions um and that could mean a lot of things but one of the obvious things is that a company being prepared to go public would work with an investment bank with Brokers with marketing agents with lawyers and to what extent can you as anExchange get involved in making these private companies more investable and thereby accelerate the growth of your own business foreign when we say making these companies more investable we uh we participate in the process and the process itself helps making these companies more attractive to a wider audience of investorsAlthough in a private in a private setting distribution it's easier uh the as I said our members are mandated to carry out the diligence on the issuing companies and due diligence on the investors uh so kycs and as I said before AML measures are are the standardizedMeasures that you would expect expect in a in a regulated environment and those checks and balances that due diligence that robustness of process that is simple and and more more uh streamlined by using uh digital digital records in this case uh um tokens on a on a on a distributed LedgerMakes them more investable uh title chains again registrations in in commercial Registries uh all the company records can be easily integrated in in the issuance process by creating digital artifacts they can be managed through uh using a token for validation for example we can automate through smart contractsThe whole chain of uh of checks that need to be performed in a way that is perhaps a lot more Dynamic than what you have at the moment where a lot of these processes are carried out based on on some sequential algorithms the other thing is that the other theThe other big advantage of this approach is that once the company is uh is uh is digitized and present on our Network there is no necessity to access a central database where you continuously pull or push information every time something happens an event happens on that security is automatically propagatedThroughout the network and visible to all the members of the uh of the network so all of that communication is missing right now companies don't have that kind of of tool to to inform their investors inform their advisors inform their issuer agents of any corporate changes for example all of that is missingNow we have better tools and we will build even better tools in the future to capture all those changes so they can be propagated throughout all the investors and in my opinion A company that communicates better and in more uh in a more consistent way also tends to have better investment successThere is a very high correlation between the way the way uh company information corporate information is propagated to the investors in the success of companies so we think that that possibility to communicate better and and more directly with investors through fewer intermediaries makes the companies more attractive andMore investable clearly as I said we can't intervene on go beyond that and you know the the uh ultimately the interest the the company is uh is investable in its own merits and in the merits of the uh of the uh of of their of their business and theirIdea but if we can take away a lot of the work that is actually now invested by company Founders by owners uh by by entrepreneurs in maintaining all that information in making sure that it's communicated to investors um into intermediaries uh if we can takeA a little even a little bit of that away from them and make the interaction better then Daddy's old time that can be reinvested in making the company successful you're also describing a a platform or a set of tools which issuers and their advisors can use uh to do these CapitalRaising exercises at at lower cost what you're not saying is that yes we're getting into the corporate advisory business and help make companies uh uh more investable that's not your business you're just there to provide the platform which yes those third-party advisors can use on behalf of theirClients or the clients as issuers can use directly themselves um I I think you've made that that clear and I hope I'm right to suggest that's what you're saying well absolutely I mean uh uh again and and thanks for pointing it out it's clearly uh we areNot moving into uh corporate advisory or uh uh but we want to fulfill our role as an FMI in making that interaction us as uh as smooth as possible there are there are also barriers to entry at the moment for advisors and potential intermediaries in some of parts of this interactionUh because they don't have effective tools to access investment opportunities or investors because there is no infrastructure to do it there is no uh no seamless tools to connect to investors we hope to be able to provide that but no our role is to provide the infrastructure and provide the this sort ofUm tools to uh to to um to execute this convergence between these two worlds you you mentioned repurposing existing functions uh the sdx group itself for example has has a as a digital CSD as part of its part of its offering and if we look at the traditional SecuritiesMarkets or and how blockchain was meant to listen to mediate functions like csds custodian Banks registration seems to be some kind of rediscovery that these things are these services are actually useful not just in the traditional markets but actually helping the Securities markets to grow to be specific do you think that havingUm an independent registrar for example will encourage more issuers to come and more investors to come to a digitized asset Market we do we think that uh share registry companies and share registrars and companies using BLT technology to digitize uh share registry um and and corporate governance the maintenance and execution ofCorporate actions uh have a very important role to play Because as I said uh there'll be points where these kind of com of of actions might might be centralized we we don't know yet but surely um there is a uh there is an indication at the moment that share registrars willFulfill a lot of those functions uh we have Partnerships with uh with um with fintech companies providing dlt-based share registries uh we are building uh one of the things we are doing we are building uh a uh connectivity for them to uh contribute and and uh and get data from ourPlatforms but also link straight into our custody our custody systems we are looking at solutions that will allow issuers to elect uh uh uh share registry and a dltbase share registry that is linked to our uh to our CSD members as their um share registry service and that will Cascade the informationFrom the issuer all the way down to the uh the um the depository Bank the records will be automatically of transfers will be automatically updated and then all that information will flow back into the into the uh into the share registry and as a consequence will be in in real time wearableBy the uh by the um by the company itself and all the advisors of the company over access to that so the share the uh the the company has a a an up-to-date uh um picture of its registry at every time and that as you know helps a lot ofUh other Downstream processes um and also the uh the uh the uh the big Advantage here is that we are trying to remove and automate the uh the update of these records by by the depository Banks or by the investors themselves so not to force them to have a a manual messageGoing through to the share register company or the company directly that then has to update the the records in the share registry um so we are trying to remove all that and to automate uh uh the the process that so that it draws from one Central uh Center of trustSo when the record changes the same principle of the uh of the uh of the digital Ledger uh that we operate applies externally all the records within the share registry are updated so yes we think that external share registry companies play an import a veryImportant role and I and this is one of the services that we are looking to automate we are on the way uh I think that we should be able to push out at least the first version of that automation next or partial automation next year so register us continue butNot in the way that we have come to know and love you mentioned Partnerships and you've you've formed quite a few of these and I'd like to just to explore um how those relationships work with you perhaps we could start with um the partnership you have with DaraAnd the burner cantanal bank now I assume that that bkb brings a kind of client flow um Dara sounded to me well the services they provide sometimes to be very comparable to what the DCCC is trying to do with its digital Securities management platform that it's building for the the private privately managedAsset markets am I right to describe those functions to bkb and to Dara and how do the Partnerships work in practice whether I've got it right or not well the the roles are are distinct but they they sort of overlap in certain areas and uh bkb is uh joining sdx as a memberSo as a member of The Exchange they will act in their capacity as issuer agents depositary and payment agent they can elect to perform the three uh the three uh the three functions within our uh so I had that wrong they're not they're not bringing you know clients from their Canton toThe marketplace they're actually providing services they are provided they are providing services on our platform then as you know uh bkb has a fairly uh important presence already in in private markets they have uh two platforms two otfs out there uh where they maintain markets in private equities in privately heldCompanies not only non-listed companies and on Structured Products uh so in a in a way they are providing secondary liquidity for these uh for these issues and one of the possibilities is that uh at a later stage of the development of the relationship the the uh thesePlatforms might be linked into our uh into our CSD so the settlement of uh of uh of some of the uh of these um of these private companies who elect to issue digital securities within our within our our exchange can be performed on our uh on our CSD so all the all theSecondary all the secondary liquidity all the trades on the secondary Market could then be uh um settled on our CSD but that is one of the of the possibilities going forward at the at the moment abena Continental Bank is uh is clearly uh interested in leveraging their position in uh in private marketsUh to help new companies issuing um issuing uh private equities in digitized form okay and be part of that of that and be part of that market in in providing further Services uh down the road um Dara as you described is that a uh is basically a fintech a very smart fintechThat provides uh um among other things share Registries custody of DLT Securities and pure tokenization um they uh they work very closely with uh with bkb so they provide a bridge uh from their DLT Securities uh into uh the the banking world and may end the thePlan is clearly uh to to make some of these dlt's based Securities bankable by bringing them into uh into uh into our CSD um so it's it's a way for us to load our platform with uh with new assets so the cooperation is uh is umIs based on is based on those terms now you've also got these Partnerships with uh with Airtech and action Ariat uh I noticed that equity in particular helped F10 in that private placement that of of tokenized shares in sdx um as a digital CSD that they were theyThey helped in that transaction so how does how do those two relationships work with equitation Ariat what are you getting out of then well again they're getting out of view as well of course so the uh the uh the um the role of equitec in that transaction was to provide a dlt-based shareRegistry for F10 so uh just what you were describing earlier then yes but the role the role I was describing the the role I was describing earlier uh so there are one of the uh of our partners uh and uh they are providing share registry for F10 at the moment theProcess is not automated but that's exactly the spirit of the partnership is that we are driving together uh to to deliver that automation I was describing before uh next year the partnership is also uh along the same lines action area provides registry uh they provide their own secondaryLiquidity to the companies that issue the lt-based Securities on their platform what we are looking to do is to build a uh uh the the the the optionality for their issuers and investors to uh take those CLT based Securities and transform them into intermediated and certificated Securities on our NetworkSo they can be settled um uh in um by the banking system and can be settled that the advantage for the investors is that in that case they wouldn't have to maintain a a separate a separate uh custody wallet or custody place they can use their uh their um their bank account theBanking account and their uh and their uh in in their uh deposit account security deposit account with their Bank sgx as a CSD yeah they would have to they uh they would have to be client or one of the banks who are uh on uh on our network uhAs member but again we cover about 90 of uh of uh of the Swiss banking uh clients our members uh as you know credit three CBS bkb and uh and um NCM equities um investors investors and and Retail clients would normally have a one would open account with one of these Banks ifThey don't uh I can only urge them to ask their Banks to become members of sdx but I I to be clear here it sounds as if this relationship makes it more convenient and more familiar for the more conservative more established financial institutions to get involved in this market because they can goThrough a banking system and a CSD account system that they are familiar with right correct that again this is about the convergence I was talking about is the uh is the is this way to provide for tried and tested processes that people are familiar with but uh providing them with a new technologyEngine and we want that in engine to be completely Invisible by the way the user experience has to be either enhanced or being as equally as good as what they have now uh uh the uh the uh the gains for the for the users is exactly that is that there is a certainFamiliarity there is a certain uh um consistent in the processes as they are as they are now so in the case of action Ariat as I said this would be a one of the uh of the options that they would provide to their issuers and to their and to their clientsAnd and again I think that the uh the uh for uh for uh for companies like Hassan or yacht what that represents is a way to expand reach and uh and for the companies to issue with action aryat uh and the uh it expanded the uh the the investors baseFor the banks expands the uh the uh if you want the addressable uh the the addressable Market uh in a way that doesn't force them to take massive jumps away from established processes and also take risks in a way in terms of or excessive risks in a wayOf uh of entering new markets they can use they can use our processes to start going into that direction uh without too much risk and and the thing is that the banks can still control that process because as I said before kyc AML uh due diligence is stillUh is still reflected by them in in the process of accepting an investor or accepting an issue on on that question of convergence and I'm talking here at a high strategic level sixes obviously invested heavily in building these digital asset capabilities but its view could have been uh we kindOf need to hedge our bets because what if digital assets they would take our traditional uh Securities business we'll we'll have this thing and and we'll be in a good position to to survive any disruption in the schools well they could take the view this gives us accessTo a whole lot of new assets um new markets and therefore we'll be able to grow our business alongside our artificials or they could take the view that in some at some point over some period of time and in the future these these two markets aren't going toConverge do you think that's the the Strategic bet which six has now placed is actually the digital asset and traditional asset markets are going over time to converge well I guess the Strategic back was uh uh is another one uh uh clearly is the fact that this digital Technologies areGoing to change the way FMI operates uh they they present clear and tangible uh benefits for for investors and for um and in general for any users of of uh of financial markets from payment services all the way down to Investments and that uh the group could wait and do nothingAnd be then forced by his clients or market dynamics or simple economic circumstances to to go into into these new technologies and adopt these new technologies or they could decide to take the lead lead and shape this change so this is this is what uh across theGroup has changed the uh the thinking in the in the the expression of that uh at group level is sdx but also a lot of other initiatives that Connect into these new technologies across data payment services and so on and so forth now if we bring that down to our levelWhere we operate in terms of of capital markets uh I sound like a broken record uh convergence is the is the key word here we are realizing that and I made examples uh there are processes that are perfectly good and work perfectly well but can be enhancedAnd can be used to provide a better experience better use experiences if enhanced with these uh uh with these Technologies there is also a uh a another aspect that is more important and is more long-term and is more where the vision is going is that uh public blockchain defy decentralizedExchanges are not going to go away but they need the expertise the uh the processes the the familiarity that traditional Financial players and more specifically fmis have with providing consistent processes we're providing trust we're providing regulated regulated uh environments in responding to um governance and um governance and and compliance uh um FrameworksIn centralizing some of these processes by the same time we recognize that we need the technology that is being developed by by in defy we need uh we are confronted with new thinking that we need to we cannot ignore so we we either help that transition andProvide the right tools and we lead and we shape this this narrative or otherwise I think we're going to be submerged by it as fmis but also again it speaks to our historical role fmis are there for a reason to provide to provide infrastructure for financial marketsThere there just happens to be new financial markets that will be catering in a different way for different needs in the future that we simply cannot ignore but the two cannot leave in isolation uh they they cannot even they can even coexist I think that they willNeed to come together and again we are uh we are there to provide that to help to help that transition in both ways now if you assume you use the words lead and shape there as well as about talking about about convergence and as as you look forwardIn the way in which the the strategy will unfold over time if you like is um is sdx here um orchestrating that change it's building this ecosystem you've got these Partnerships you believe that these existing intermediary functions will survival be it in in Altered forms so isThe is the vision here ultimately the way kind of networked industry which in which sgx is which sdx is a part or is it going to be a network which STX is itself building and creating this uh I think network is the right word I could use the word um ecosystemUm but it does does sdx become part of a wider Network or does it shape and lead a network of its own and bring along all these other forces and players as a result of these powerful secular forces which you've described very articulately about technology about the decline ofIPOs uh the need for you know private companies to access new forms of ways and finance their businesses in in new ways these are all powerful forces to which you're responding to what extent can this network be your creation as opposed to you being simply part of it you'reAsking you're asking me uh um to gaze in my uh in my crystal ball yes yeah uh so it's a very uh you know um I think that we are discovering new things all the time and that is what is exciting of being being involved inIn in in capital markets at the moment in is is a very exciting moment because we are we are restarted discovering new things and new ways of of doing things um I think that if we have if we look at the world at the moment chances are that not only sdx but fmisIn general will be part of a vast Network and uh but they will uh have in my opinion a uh a very important role to play in shaping and influencing the way that that network works Um there are functions that can be centralized uh or will have to be centralized on that Network uh things like you know who owns the trust who permissions certain actions and certain functions uh who will make sure that uh you know certain certain compliance permissions a certain regulatory uh uhRules are are respected that will probably need to be centralized they won't be won't be uh uh decentralized across the network so you will probably need these centers of trust that still exist and I think that fmis will be that and they will provide uh the the infrastructure to the rest ofThe network to to carry out that that function so we can see already some areas where fmis will provide uh uh it will be part will be a node in that Network and uh they will they will provide some centralized functions the other uh if you extrapolate for that you canThink of a future where uh you know there will be a necessity perhaps to uh provide some sort of uh uh sub networked uh settlement or clearing functions uh that cannot be relied upon in peer-to-peer exchanges in in bilateral in bilateral transactions that need to be uh that need to be stillCentralized and performed by a center of our Center of trust um then if you look at how what comes before that is liquidities transactions where does that liquidity takes place can fmis help that liquidity developing or that is that liquidity better served by the network itself free and unconstrained to to develop thatLiquidity as they want and as they wish and exchanges will perform only post trade what we call now traditional post-trade functions I'm sure they will be different um will the exchanges maintain uh ledgers where specific transactions are uh are validated or uh or permissioned um so to answer your question we think thatFmis in general will become nodes in that Network then as you know not all nodes are created the equals some nodes are larger so nodes are smaller so nodes will perhaps uh provide specific Services um but I think it's gonna be uh we're gonna be part of uh of a of a widerNetwork just back on planet Earth are there concrete synergies now between what sdx does and what 6sis does what do you at this present operate mainly in separate silos well at the moment we um we operate in separate silos as you know sdx is uh is an independent entityUh within within the group we have our own separate regulatory license with finma so we are regulated the the our CSD and our markets are regulated uh separately from from six as a separate exchange then clearly internal uh there are a lot of of synergies that we canLeverage on that have been built um with the traditional world uh or with the with with the rest of the uh of the of the group uh certainly we are learning a lot uh and a lot of these lessons are clearly being leveraged upon by the rest of group uhAlso I would like to point out that the uh the the activity the the say the the blockchain technology DLT activity of the group is not only confined to to sdx within the group there are other areas you know the divisions who are looking at these Technologies and they'reAlready using and Building Services based on these Technologies but I think that different centers of of knowledge and and skills and and uh and competence uh within the group uh slowly slowly are trying to get together and and uh and they will leverage certainly leverage on each otherCan I ask a very basic question now about how you go about finding uh issuers you've touched on this in a number of ways and you you've certainly described very clearly how the services you you provide help to cut the costs of uh raising um capital and you've described veryClearly how uh that doesn't necessarily mean disintermediating all the functions of the traditional Securities uh markets I've noticed you're working with with CM equity which is a I think I'd like to say as a German introducing broker or corporate advisor with a specialty in in in the digital asset areaUm is that is that is relationships like that how you think you're going to find um the deal flow if you like of of issuers going forward well at the moment yes we are relying on internal counterparts uh external counterparts sorry to um provide the deal flow of uh of issuersUm we want to enhance that we want to have more partners that uh can potentially provide flow into our platform however uh as you know and that's a lesson from the uh from the old world uh exchanges across the piece are fairly active in scouting and selling their issuanceServices and their primary markets to issuers directly the London stock exchanges for example an example of that and in other exchanges due to are we gonna ask um are we going to start down the same the same route uh possible uh if we seeIf we see a benefit uh for the uh for the whole ecosystem and for the community of us being more active in in marketing uh in in marketing directly to each first which is something that we already do in a sense but in a very restrictiveNot very restricted in a very small way whether we're going to go into that uh it's a possibility we would certainly do it though with our uh with our partners and with our members and those issuers are impressed when you talk to them by the possibility ofCutting the costs of capital I'm sure correct me if I'm wrong whether that that argument is failing to land I'd be interested to know but how much do they care about other things like custody by which I mean the servicing of of the assets the payment of of dividends toTheir investors how much do they care about secondary market trading the place where the price is put on on their their instruments how much they care about those things as opposed to Simply getting cheaper capital uh there are um the asset servicing part of it is becoming more and more importantBecause they do realize that uh it's uh it's a cost it's a cost that they have to maintain long term is a recurrent cost that they have um in terms of the secondary Market it's interesting some issuers want or would like to have a secondary Market on their on their sharesSome some Founders and very recently we spoke to a couple of them uh go like why would I want a secondary Market on my um on the shares of my company uh it's not in my interest it's not in the interest of the company it's not in the interest of the other shareholdersWe don't think it's uh it's it's a requirement for us all the founders we talked to and we we we do research with uh seem to indicate that they like the principle of secondary liquidity but they like also the uh the um the idea that they can controlThat liquidity one way or the other so in a sense for example they can they can potentially white list investors that can transact on on on the shares they can agree with the boards in terms of access to those secondary markets they can for example um create specific liquidity eventsFor their for their for their shares um so I think that there is to answer your question there is a more heightened awareness of the benefits of the uh asset maintenance piece uh and there seems to be a consensus that it is something that we need toAddress because it makes up it makes a difference it makes a difference in terms of of cost because a lot of that cost is sometimes embedded in fundraising so um the uh the uh you know there is a cost Associated to that um long term in the secondary MarketIt's it's less clear it's less clear uh some of uh some some issuers see it as a massive benefit some of them like a nice to have and some of them are completely against it because they think it's a distraction now you need investors as well and howMuch do they care about secondary Market liquidity and custody how important how valuable is it to them to know that they can sell what they're holding the liquidity is there and they can be confident there's assets are being kept safely and yes they're dividends when they're paid will be paid on timeWell is there a clash of interests here between issuers and investors when you ask well eighty percent of investors want secondary liquidity however uh when you drop down and you drill down exactly on what they mean with secondary liquidity you will notice that they have uhUh you know they don't all mean or we want a central order book uh where we can we can transact percentage of investors don't care because they say we invest long term in these companies we have a close enough uh relationship with the founders and with the boards of these companiesSo we can create our own liquidity when is needed but also there is again the the it depends it depends the uh the the type of investors investors that are uh you know the classical VC investors that invest long term they're not too um they're not too uhToo bothered to have regular secondary liquidity they say as long as I have an efficient way for my exit that doesn't Force the company I invested in to go public then it's fine with me but I certainly don't need a a uh you know I uh a continuous auction based Central order bookFor Mom to support my investment because we don't we just don't invest like that right and how important uh you're obviously growing this business it's founded in Switzerland it's growing in Switzerland how important in creating this relatively mature digital Asset Marketing switches has been the developments in Swiss law do you thinkThat sgx could be doing what it's doing without that legal underpinning well DLT law has changed uh corporate law if you want in Switzerland more than uh financial markets law or regulatory so I think that in it has enabled uh for us uh the that the law has enabled thePossibility for us to offer new services such as a a an exchange a regulated exchange based uh market for digital securities the the law has brought about uh changes in in the way uh um companies can issue shares and the type of shares they can issueAnd that also has uh provided a uh a rail for the recognition of uh DLT Securities that has then caused a change in the code of obligations of these companies that is really the the key element of the legislation that enables the the possibility to issue uh uh Equity or debtUh sometimes in in digitized format so I guess that the uh the uh to answer your question it has enabled a lot of the things we do and also the the uh it has enabled uh uh the design of new actors such as you know DLT share Registries and thingsLike that to come into into the marketplace have you been able to size this opportunity by which I mean this focus on you know privately managed companies for example either size it in Switzerland or Europe or indeed the world or is it would that be a full zerund uh no no we weHave sized the the market opportunity uh although it is it is difficult it doesn't make it a Fool's hair end uh it doesn't make it a complete pointless exercise actually by the contrary but it is difficult to to frame the data you get into and and also the way the context inWhich you interpret that data however just a few data points for the Swiss market and and we are very focused on this Market because we want to you know we want to learn to walk before we run and uh in uh in Switzerland last year there were uh recorded officially 350 funding roundsUh carried out in the private markets uh we as an exchange for a traditional exchange or now digital Exchange in operation for exactly 12 months have seen the the grand total of zero of those funding rounds um so that is uh our you know our Baseline these are the recordedOfficially recorded uh uh funding rounds in several public Publications and and databases and these are mostly uh confined to seed and series A's and B's Uh on top of that we have all the funding and all the funding and capital raise activity of more mature smes that are using uh private capital for growth or uh banking banking facilities loans uh for uh for sport and medium term medium-term capital that is more that is data that is moreDifficult to get but we think is uh it runs in tens of thousands of transactions every year in in Switzerland only so there is in in Switzerland only a substantial addressable market for us um we are very conservative on our estimates uh for us success would be startCapturing on a regular basis part of these uh early stage funding rounds I have one final question for you uh I must say a high level one I suppose we look look at what's happened in the cryptocurrency markets since November last year uh it's been a rather sorryStory culminating in the in the uh collapse of of FTX which has shaken confidence in those markets to a degree previous events seem not to have done yet last week we we had you know the chief executive of BlackRock Larry Fink say that uh the Next Generation for markets the Next Generation forSecurities will be tokenization of Securities so is it safe to say that the uh the blockchain technology in the instance of tokenizing Securities or other types of financial instrument has successfully decoupled itself from the cryptocurrency markets it now has an independent existence and will succeed or fail on its own terms andHave nothing to do with what's happening in the cryptocurrency markets is that the point we've reached yes I think we are we are at that point uh I think that uh we what we've witnessed uh in the last uh four or five weeks uh points to a view that the technologyIs a separate it is a separate separated item in this in this discussion if you look at the uh the failures of FD uh of uh of of FTX it's a very traditional failure if you if you look at it uh based on Leverage uh for governance uhPull controls pull checks and balances uh the list is very long and you know um certainly it's been widely reported upon I don't think that that has tarnished the value proposition of the technology but more importantly has tarnished the value proposition of building an ecosystem around these assetsSo I think that yes we are at a point where now the two things are being decoupled and where the technology has been seen uh and consider on its own merits and on the advantages and the promises that it holds for for the future foreign thank you very much for taking so muchTime to share with us your knowledge and your insights and indeed your prognostications for the future thank you