Gibraltar Stock Exchange to Offer Digital Debt Securities and Funds

April 17, 2019

The Gibraltar Stock Exchange (GSX) is set to become one of the world’s first stock exchanges to offer listing services for digital debt securities and digital funds. The GSX will today begin listing products known as ‘digital,’ ‘smart’ or ‘tokenized’ securities, including Corporate Bonds, Convertible Bonds, Asset-backed Securities, Derivative Securities, Open-End Funds and Closed-End Funds, utilizing distributed ledger technology (DLT) 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 become one of the first traditional stock exchanges 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 becoming a DLT-enabled exchange for conventional securities, recognizing 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.

Using DLT, the GSX will be able to open up greater liquidity pools, making illiquid assets more accessible, and lay the foundations for democratizing the capital markets that, technology-wise, have gone largely unchanged for decades. With the STACS Network, the legacy systems of T+3 will be supplanted by an immutable ledger for greater transparency, fully auditable smart contracts, regulatory oversight, efficient settlement, and high-efficiency, low-cost opportunities for issuers.

The GSX Global Market is a practical listing venue option for issuers offering reduced timelines and listing costs, with a 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 recognized stock exchange (the GSX Main Market) regulated in an EEA territory. Commenting on the announcement, Nick Cowan, CEO of the GSX Group, stated:

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

The GSX will have the ability to launch digital debt securities and fund listings via smart contracts on the STACS Network, 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 of an EU-based regulated exchange will empower issuers and offer greater opportunities for 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 listings. 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 customizations for issuers and enterprise wallet custody solutions. The GSX Group also boasts an experienced fund administrator in digital assets, with incorporation services, providing further opportunities for issuers.

If you have the ambition to become a GSX member firm or a potential issuer aiming to utilize blockchain-based digital securities on a regulated stock exchange, please provide your credentials and deal specifics HERE.

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