In a landmark development, the World Bank has listed its “first digital native security,” also known as a Digital Native Note (DNN), on the Luxembourg Stock Exchange (LuxSe). This move marks a critical chapter in the global financial markets’ digital transformation. Moreover, this issuance stands as part of a multi-year, expansive initiative aimed at marrying the virtues of digital technology with the liquidity and accessibility features of traditional bond markets.
A comprehensive digital ecosystem for financial instruments
The creation and listing of this €100 million DNN have been achieved through a collaboration that features some of the biggest names in the financial industry. Citi’s Issuer Services played the role of the issuing and paying agent, while TD Securities acted as the dealer. Consequently, the project leverages R3’s Corda digital ledger technology (DLT) platform as its technical foundation. Euroclear’s D-FMI, which is integrated with its traditional settlement platform, facilitates secondary market activities for the DNN.
Significantly, this venture also aligns well with Citi’s broader digital asset solutions strategy, encompassing digital currencies, trade securities, custody services, asset servicing, and collateral mobility. Additionally, it is worth noting that Citi Securities Services currently manages assets valued at approximately US $28 trillion and offers an extensive range of securities services solutions, supported by cross-border capabilities and local market expertise.
LuxSE’s progressive embrace of digital securities
Besides being the venue for the World Bank’s DNN listing, LuxSE has been a forerunner in welcoming digital securities. It has already distinguished itself by becoming the first EU exchange to list digital securities from Societe Generale on its Securities Official List (LuxSE SOL). Furthermore, it added three digital securities issued by the European Investment Bank, including the world’s first-ever digital Climate Awareness Bond in June this year.
Arnaud Delestienne, Director of International Capital Markets and a Member of LuxSE’s Executive Committee, stressed the exchange’s steadfast conviction in the transformative potential of Distributed Ledger Technology. LuxSE anticipates that the extensive adoption of this technology will bring forth several advantages, such as reducing costs, speeding up processes, and increasing transparency for all market participants.
However, it’s crucial to highlight that this initiative by the World Bank and its partners like Citi, Euroclear, TD Securities, and IBRD doesn’t stand in isolation. It is part of a larger, more comprehensive plan to set up a scalable framework. This framework aims to incorporate the benefits of digital transformation into the domain of debt capital markets, thereby creating a full-fledged digital transaction lifecycle. Hence, the listing of the World Bank’s DNN on the Luxembourg Stock Exchange is not merely a one-off event; it represents a significant milestone in an ongoing journey towards the full digitization of financial markets globally.