UBS Issues Hong Kong’s First Investment-Grade Tokenised Warrant on Ethereum

Source: Fintech News Hong Kong

UBS has launched Hong Kong’s first investment-grade tokenised warrant, leveraging the Ethereum public blockchain. This product is part of the bank’s UBS Tokenise initiative, aimed at advancing its in-house tokenisation services.

The product is a call warrant with Xiaomi Corporation as the underlying stock. The tokenised warrant is also reportedly the first natively issued warrant on a public blockchain that was sold to OSL Digital Securities Limited, a licensed virtual asset platform operator and wholly-owned subsidiary of OSL Group (formerly BC Technology Group).

Tokenised warrants are distinguished by enhanced accessibility, efficiency, and transparency. They enable investors to access digital structured products through blockchain technology, which facilitates extended trading hours and compatibility with various platforms.

The use of smart contracts in these warrants streamlines trading and administrative operations, reduces costs, and leverages a decentralised ledger for transparent transaction and ownership records.

UBS has been exploring blockchain and digital assets since 2015, focusing on developing institutional grade infrastructure for tokenised assets.

Its efforts include the issuance of a US$50 million tokenised fixed rate note to clients in the Asia Pacific in 2022 through the UBS Tokenise platform, which caters to the origination, distribution, and custody of various financial products.

“The introduction of the UBS tokenised warrant reinforces the bank’s position as the leading derivative products issuer in Hong Kong. Created natively on a public blockchain in a permissioned environment, this innovative product enhances transparency, reduces transaction fees, streamlines settlement processes, and allows for more flexible trading hours.”

Winni Cheuk, Head of Sales, APAC Public Distribution, UBS Global Markets said.

“We are simulating the whole product life cycle of an equity-linked structured product token, from token mint, through simulated secondary market transactions, and finally to token burn at maturity. Hong Kong’s regulated virtual asset landscape has just crossed another major milestone with this investment grade tokenised financial product issuance.”

Patrick Pan, Chairman and Chief Executive Officer at OSL Group said.

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