Bank of England approves an HSBC–LSEG link so investors can reach the UK's DIGIT gilt
Serguey Asael Shinder1 min readHM Treasury announced on 2 November two steps towards the pilot issuance of the Digital Gilt Instrument, DIGIT, the UK's first digitally native government bond. The Bank of England has given regulatory approval to a link between the Digital Securities Depositories of HSBC and LSEG, which the Treasury calls a world first. It will let investors access DIGIT through either infrastructure, which the Treasury says should reduce fragmentation between digital platforms and widen participation in the pilot.
The six banks already named for the deal, Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets, have now been given specific lead manager roles. Those roles cover documentation and bookbuilding, investor communications and helping investors get onto the digital platforms through which DIGIT will be available.
The pilot issuance is still expected by the first quarter of 2027. DIGIT is part of the government's Wholesale Financial Markets Digital Strategy and is meant to test how distributed ledger technology can be used in issuing UK sovereign debt. Economic Secretary Lucy Rigby said the announcements take the government another step closer to issuing the bond early next year.
What it means
The link is the substantive news. A digital bond that can only be held on one platform would split its investors by infrastructure; a regulated bridge between two depositories means a buyer does not have to pick a side to take part, which is a precondition for the pilot telling the Treasury anything about a real market.