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SDX’s David Newns Explains The Importance Of Blockchain Interoperability

The recently released fourth episode of Chainlink’s “The Future Is On” spotlight series features David Newns, Head of SIX Digital Exchange (SDX), who shared his insight on blockchain’s key use cases in traditional finance and why interoperability is vital to institutional adoption.

SDX is a fully regulated financial market infrastructure (FMI) built on blockchain technology and one of a dozen major financial institutions and FMIs that collaborated with Swift to demonstrate how Chainlink’s Cross-Chain Interoperability Protocol (CCIP) allows banks to transact with a range of private and public blockchains using their existing infrastructure.

“We see a lot of promise in blockchain technology – so much so that in 2018, SIX Group got behind this initiative to develop this FMI on blockchain technology with the expectation that the future financial markets infrastructure will be built around tokenized assets and blockchain,” Newns explained.

He said institutional blockchain adoption hinges on fundamental technologies that allow digital assets to be created, secured, and distributed with the same standards as traditional assets. Essential to this stack is a cross-chain interoperability standard like CCIP that allows traditional finance to transact with the multi-chain ecosystem using legacy infrastructure. 

For SDX, this means being able to issue a bond that is purchasable by onchain and offchain entities.

“We’re not only enabling those investors whose custodians, brokers are already on the SDX platform to actually be able to purchase that particular bond, but also have a bridge into the traditional infrastructure,” Newns explained. “So you can issue a bond digitally but also enable that to be traded and settled on the traditional infrastructure as well.”

As a result, he said issuers benefit from being able to “address the entire liquidity that exists within the ecosystem beyond simply the digital, blockchain-based technology.”

During a panel discussion about how banks are using CCIP to unlock digital assets onchain at SmartCon 2023, SDX’s Head of Digital Securities, Alexandre Kech, said, “It’s inevitable that in the future we will live in a world of multiple private and public blockchains having to somewhat interoperate to ensure that assets can flow from one issuer to a client, one investor to another investor.”

Newns reiterated this view. “We expect in the future we’ll need to interoperate with public chains to facilitate a number of different use cases so that interconnecting and interoperating in a safe fashion is going to be absolutely critical as the environment develops and grows and we provide new functionality and new services within the space,” he said. 

“What we mustn’t have and what simply cannot be allowed is silos of liquidity and lack of interoperability between those silos. This only really works if these distributed ledgers can actually talk to each other and that’s where I see Chainlink playing a really critical role and that’s why we’re so excited to be partnering with them.”

Watch the fourth episode of “The Future Is On” featuring SDX’s David Newns.

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