The three series of security tokens admitted on LuxSE SOL are digital covered bonds (OFH Tokens) and structured products that have been issued and deployed by Société Générale’s digital assets arm, Société Générale – FORGE (SG – FORGE), natively on the Ethereum and Tezos public blockchains respectively. They are characterized as financial instruments and debt securities under French law and are compliant with the CAST open-source interoperability and securitization framework.
This admission takes place within a larger context marked by the acceleration of market digitalization using blockchain technology, notably through the imminent adoption of the EU Pilot Regime, which is expected to enter into force in 2022, and which will permit the processing of security tokens through market infrastructures in compatibility with applicable EU regulations within a transitional period.
Native security tokens issued on DLT allow for a fully digital issuance process and lifecycle. Due to their innovative characteristics, native security tokens have the potential to significantly improve efficiency and transparency in financial markets and make transactions safer and more resilient – all while offering benefits similar to those of financial instruments issued in a conventional way.
DLT going mainstream in financial industry
This new development by LuxSE into the DLT sphere, is a natural next step in LuxSE’s ambitious digital agenda, underlining the exchange’s commitment to digitizing and modernizing capital markets.
“The admission of security tokens on the Luxembourg Stock Exchange Securities Official List represents a true milestone for EU financial markets as it provides for a unique, innovative, robust, and publicly accessible solution for issuers and investors of these instruments. This constitutes yet another significant step towards the digital transformation of the Luxembourg Stock Exchange, and a very first building block in our contribution towards price discovery and transparency of financial instruments issued using DLT,” said Julie Becker, CEO of LuxSE. “We are delighted to welcome Société Générale, a leading institution in the DLT space, as the first issuer of security tokens at our exchange and are confident that other issuers will follow suit as more and more market participants capitalize on this disruptive technology.”
To clarify the eligibility criteria and guide issuers of security tokens through the admission process, LuxSE published Guidelines for the registration of DLT financial instruments onto SOL. To be considered for admission on LuxSE SOL, security tokens will need to respect these guidelines as well as the LuxSE SOL Rulebook.
A pioneer in the field
Société Générale is a pioneer in the DLT space, with innovation sitting at the heart of the group’s strategic priorities. Since April 2019, Société Générale and its subsidiary SG – FORGE, dedicated to digital assets, structured several native security tokens issuances deployed on DLT for their clients. The last in time being the European Investment Bank’s (EIB) 100m€ digital bond issued in 2021.
Arnaud Jacquemin, CEO of Société Générale Luxembourg and member of the Société Générale group Management Committee, commented: “Leveraging on the differentiating expertise of the SG – FORGE teams, our intimate knowledge of the Luxembourg capital market environment and our close relationship with LuxSE, this first-ever listing shows our institutions’ capacity to step-by-step implement a truly innovative technology, thus helping build tomorrow’s global capital market distribution approach and infrastructure”.
Facilitating indicative price dissemination and data
Given the complex nature of security tokens, in the initial phase, LuxSE’s new service will only be available to experienced issuers and applicants with a proven track record in capital markets transactions. Moreover, only financial instruments, and more specifically debt securities, can be admitted on LuxSE SOL at this stage.
As is the case for other securities registered on LuxSE SOL, security tokens will not be admitted to trading on LuxSE’s markets. However, the registration of DLT securities on LuxSE SOL will provide enhanced visibility to security tokens and their issuers, and furthermore facilitate the dissemination of indicative prices and securities data on this new form of financial instruments.