DRW and Marex complete Canton swap on tokenized iBoxx index

DRW and Marex completed a total return swap on Oct. 13 that references a tokenized S&P Dow Jones Indices credit benchmark, marking the first OTC swap on the Canton Network and the first OTC derivative tied to a fully tokenized index on distributed ledger infrastructure, according to S&P Dow Jones Indices’ announcement.

Which index does the swap track?

The swap references the iBoxx USD Liquid Investment Grade Index. S&P DJI licensed the index for use by DRW and Marex Solutions, while Kaiko tokenized it on Canton and distributed signed official index values for Derivnex to use in valuing the position over its lifecycle.

How does the Canton trade work?

Derivnex represented the trade on Canton as a smart contract containing its terms, designed to stay with the transaction throughout its lifecycle. The platform gives the counterparties a shared record for valuations and other trade events, while Canton supports coordinated workflows with confidentiality, the announcement said.

The Block also reported that the trade used Derivnex’s Canton-based platform and Kaiko’s index data. Derivnex incorporates the Common Domain Model, a standard digital representation for derivatives transactions and lifecycle events, according to the announcement.

What comes next for Derivnex?

Derivnex initially plans to focus on equity and index derivatives, including index, basket and single-name products. The announcement says future functionality is expected to connect positions with digital cash and collateral on Canton, which could bring margin, collateral and contractual payments onto the same infrastructure.

The announcement did not disclose the swap’s notional value or terms, or say whether DRW and Marex plan further trades. It also did not give a timeline for the planned cash and collateral functionality.

Source material

• S&P Dow Jones Indices’ announcement — prnewswire.com