SIX & Pictet Break New Ground with Bond Tokenization Pilot

Traditional finance giants dip their toes into blockchain—because nothing says 'innovation' like playing catch-up with DeFi.

Swiss powerhouses SIX and Pictet just fired the starting pistol on a bond tokenization experiment. No more paper trails, no more settlement delays—just digital assets moving at the speed of light.

Why now? Because even private banks can read a Bloomberg terminal. Tokenized bonds could slice settlement times from days to minutes while unlocking 24/7 markets. That is, if they don't get bogged down in compliance theater first.

Watch this space: if successful, this could pressure other legacy players to finally drag their vaults into the 21st century. Or at least issue a press release about 'exploring blockchain solutions.'

New potential through tokenization

For the first time, the pilot project enables the decomposition of traditional bonds into fractional tokens (fractionalization), allowing for finer segmentation and greater diversification. Through automatic rebalancing, portfolio managers can implement tailor-made investment strategies that WOULD be difficult to achieve within conventional structures – a major advancement for asset managers.

The bonds were held in SIX’s custody system and tokenized on the DLT-based SDX platform. This infrastructure enables regulated on-chain handling of traditional financial products without altering their legal nature. For the first time, a fully regulated workflow is available, covering issuance, trading, and settlement.

David Newns (Head of SDX) called the project a “milestone for tokenized securities” and sees it as the beginning of more efficient and scalable asset solutions. The new approach makes it easier to take on smaller exposures in corporate bonds and boosts interest in digital financial infrastructure among banks and funds.

Digitalization as a game changer

The pilot project is part of the global tokenization movement – similar to initiatives in Australia or the Citi/SDX project for pre-IPO equities. At the same time, Hester Peirce from the US SEC cautions that tokenized securities must still be treated as securities under the law – blockchain does not change regulation.

Particularly for the retail fund market, the model represents a potentially disruptive step. Asset managers will in the future be able to use fractionalized products at the push of a button to pursue smaller or more specialized strategies. Another benefit is the automation of rebalancing processes – from entry to distribution.