UK government chooses HSBC platform for digital gilt pilot

The UK government has chosen HSBC as the platform provider for its digital sovereign bonds trial following a tender process launched in October last year.

The Digital Guilt Instrument (DIGIT) pilot will explore the digital issuance of government bonds using distributed ledger technology (DLT).

The pilot will test how DLT can be used across the lifecycle of gilt issuance to see if it can boost efficiency, transparency and cost effectiveness in UK financial markets.

The government said it wants to implement a range of design features, including making DIGIT accessible to a wide range of participants and supporting the development of secondary markets.

It added that it is actively engaging with additional suppliers as well as HSBC to support the delivery of these features.

The DIGIT pilot has been designed to be digitally native and short-dated.

It will be issued on a platform which operates within the Digital Securities Sandbox (DSS) and will remain independent of the government’s main debt management programme.

The trial is a major step towards launching the DIGIT issuance, a key part of the government’s Wholesale Financial Markets Digital Strategy.

The Strategy aims to remove outdated processes, digitalise wholesale financial markets, and take advantage of new technologies like DLT.

“HSBC is delighted to be supporting the continued development of the gilt market, market innovation, and the growth of the broader UK economy,” said Patrick George, global head of markets & securities services at HSBC. “We are very pleased that HM Treasury has chosen our market-leading digital assets platform, HSBC Orion, for the DIGIT pilot issuance.”

Lucy Rigby KC MP, economic secretary to the Treasury, said that the launch of DIGIT would help the government understand how the UK can capitalise on this technology, deliver efficiencies. and reduce costs for firms.

“This is exactly the kind of financial innovation we need to keep the UK at the forefront of global capital markets and I’m looking forward to working with HSBC and other parties to deliver DIGIT,” continued Rigby.