A very interesting development out of Switzerland today. Six Securities who run the main stock exchange and clearing functions in Switzerland have just dropped a gold bombshell. From the release:
In a significant industry innovation, SIX Securities Services, the Swiss post-trade market infrastructure today announced the world’s first Delivery versus Payment (DvP) settlement capability against gold.
SIX Securities Services has successfully settled a number of transactions against gold with pilot clients.
The SIX Securities Services settlement team significantly reduced time-to-market for this product by treating gold as a settlement currency as well as a foreign currency (XAU).
The value of one XAU unit is defined as one troy ounce of gold valued in US dollars.
Clients wishing to settle transactions against gold will need to have an XAU account with SIX Securities Services (through its CSD – SIX SIS Ltd) and they need to ensure that their account is adequately funded – as would be the case with any other currency.
Based on this innovation, SIX Swiss Exchange and Scoach Switzerland are planning to introduce the listing and trading of structured products denominated in XAU in October.
So now people can trade on the Swiss stock market buying and selling shares not using Swiss Francs but gold, settled in gold and delivered in gold. This is just another milestone in golds long march to being once again globally recognised as money.
Also note that they way they did this was to simply “treat gold as a settlement currency as well as foreign currency” – And to think some central bankers think gold isn’t money – a way of thinking that is increasingly becoming like, so 1999.