Société Générale joins European tokenized securities push

Boerse Stuttgart Group announced that Seturion has partnered with Société Générale, its subsidiary for crypto assets, SG-FORGE, and its broker partner, flatexDEGIRO, in a blockchain settlement solution for tokenized securities.

This partnership joins together one of the biggest European banks, a licensed stablecoin issuer, and one of the leading retail brokerage firms in Europe on one post-trade technology platform. Seturion offers blockchain solutions for tokenized financial products.

Europe tests on-chain settlement

Seturion aims to provide fast and inexpensive post-trade settlement solutions in Europe, where settlement is to become centralized through national central securities depositories. Under the agreement, Societe Generale will tokenize structured securities such as turbo warrants and investment certificates on Seturion.

Settlement will be carried out via SG-FORGE’s EURCV (euro stable coin) and USDCV (dollar stable coin). According to the firm, it is the first major European bank-owned issuer operating within the European Union’s Markets in Crypto-Assets (MiCA).

flatexDEGIRO will reportedly market the products to its clients in Europe.

The starting point is that of structured products like turbo warrants and investment certificates. The European markets of Nasdaq, which have already begun collaborating with Seturion, have also indicated structured products as their starting phase in the tokenization of trade and settlement.

Yet, full-scale adoption within the EU would be dependent upon approval by the relevant regulators, under the umbrella of the DLT Pilot Regime, such as BaFin in Germany, for DLT-based trade and settlement. The market participants who made prior disclosures had said that the process could proceed only after the necessary regulatory approvals had been received.

Seturion challenges bank-led settlement networks

Seturion is entering a highly competitive space for tokenized settlement efforts, which includes:

• HQLAᵡ that focuses on liquidity of digital collateral, especially repo and securities financing processes
• Fnality International, which develops wholesale payment systems using tokenized central bank money to effect atomic settlements of payment transactions.
• JPMorgan Chase & Co., which developed Onyx (now Kinexys), which supports tokenized deposits and intraday repo settlement within a bank-controlled network.

In contrast to bank-led systems and tokenized collateral solutions, Seturion represents an open multi-venue settlement technology for connecting issuers, brokers, and exchanges across Europe.

Interoperability technologies have been successfully tested in various industry settings, including atomic delivery-versus-payment settlement and cross-chain collateral movement, and more.

Structured securities make up a huge share of the investment market within Europe. By placing structured securities into the blockchain-based ecosystem, stablecoins can be used in institutions in order to become a legitimate currency, rather than a speculative one.

In addition, EURCV and USDCV can be introduced through the settlement mechanism of structured securities issued by large banks and traded by large retail brokers.

Adoption of the platform will mainly depend on regulatory efforts and progress made in the field of the financial industry within the framework of the EU DLT Pilot Program. The Seturion project represents another example of convergence between the old model of capital markets infrastructure and blockchain-powered settlement systems.