SocGen’s security tokens admitted in Luxembourg as markets adopt blockchain

Rick Steves

The digital covered bonds were issued and deployed by Societe Generale’s digital assets arm natively on the Ethereum and Tezos public blockchains.

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Societe Generale has announced the admission of three series of security tokens on the Luxembourg Stock Exchange (LuxSE) in an unprecedented move on the country’s exchange operator.

These are the very first financial instruments registered on a public Distributed Ledger Technology (DLT) on LuxSE’s Securities Official List.

The three security tokens are digital covered bonds (OFH Tokens) and structured products that have been issued and deployed by Societe Generale’s digital assets arm, Societe Generale – FORGE (SG – FORGE), natively on the Ethereum and Tezos public blockchains respectively.

Characterized as financial instruments and debt securities under French law, the OFH Tokens are compliant with the CAST[i] open-source interoperability and securitization framework.

Adoption of the EU Pilot Regime

The listing of SocGen’s issued and deployed digital covered bonds is part of the adoption of blockchain technology within the finance industry. Market digitalization is accelerating notably through the imminent adoption of the EU Pilot Regime, which is expected to enter into force in 2022.

The new regime will allow the processing of security tokens through market infrastructures in compatibility with applicable EU regulations within a transitional period.

Native security tokens have the potential to significantly improve efficiency and transparency in financial markets and make transactions safer and more resilient.

Julie Becker, CEO of LuxSE, said: “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. We are delighted to welcome Societe Generale, 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.”

Arnaud Jacquemin, CEO of Societe Generale Luxembourg, said: “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”.

SocGen has been active in the distributed ledger technology space via subsidiary SG – FORGE as the specialist in digital assets and structured several native security tokens recently helped the European Investment Bank’s (EIB) with an issuance of a 100m€ digital bond in 2021.

 

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