Euroclear has successfully executed the first bond issuance on its Digital Financial Market Infrastructure (D-FMI) using distributed ledger technology (DLT). The €100 million Digitally Native Note (DNN) was issued by the International Bank for Reconstruction and Development (IBRD), the World Bank’s lending arm, and listed on the Luxembourg Stock Exchange. Key players in the issuance included Citi as the issuing and paying agent, TD Securities as the dealer, and Euroclear Bank as the Central Securities Depository (CSD).

Euroclear’s D-FMI is notably linked to the conventional settlement platform, ensuring compliance with the Central Securities Depositories Regulation (CSDR). This integration allows investors who may not yet support digital securities to participate, providing access to trading venues and liquidity management. The move positions Euroclear as a fast follower, leveraging the experience gained from initiatives like SIX Digital Exchange (SDX), which linked its digital and conventional CSDs for trading and liquidity purposes using R3’s Corda blockchain technology.

Advancing the Digital Transaction Lifecycle with Digitally Native Notes

The issuance and settlement of Digitally Native Notes (DNNs) on a same-day (T0) basis represent a significant milestone in the bond sector. This development, achieved through collaboration among Citi, Euroclear, and IBRD, establishes a scalable model merging digitization benefits with existing bond accessibility and liquidity. The initiative aims to revolutionise debt capital market operations, laying the groundwork for a fully digital transaction lifecycle.

The successful issuance is the outcome of a multi-year collaborative effort, with key industry stakeholders joining forces to create a robust digital infrastructure for DNNs. Andrew Mulley, EMEA Head of Citi's Issuer Services, emphasised the initiative's potential to transform debt capital market operations. Ryan Marsh, Global Head of Blockchain, Digital Assets & Innovation for Citi Securities Services, hinted at additional digital bond initiatives in the pipeline.

This announcement aligns with the broader trend of major Central Securities Depositories (CSDs) positioning themselves for the upcoming wave of tokenization. The move by Euroclear follows recent developments by other CSDs, such as the DTCC's acquisition of Securrency and Clearstream issuing over 1,000 digital securities on its D7 platform. The digital venture also reflects the World Bank's ongoing journey into digitization, five years after its pioneering issuance of the first blockchain bond, "bond-i," in collaboration with the Commonwealth Bank.