UK moves closer to launching first digitally native government bond
The UK is a step closer to launching its first digitally native government bond, with roles allocated to the six banks supporting the landmark pilot.
- Six banks given specific roles to support the launch of DIGIT, the UK’s first digitally native government bond.
- Bank of England regulatory approval for a world-first link between HSBC and LSEG platforms will give investors more options to access DIGIT.
- Latest milestone towards the pilot issuance, expected by Q1 2027, as the government puts new digital financial infrastructure into practice.
Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets have been allocated specific Lead Manager roles for the pilot issuance of the Digital Gilt Instrument (DIGIT), marking another major step towards its launch.
The roles cover key parts of preparing and delivering the transaction, from documentation and bookbuilding to investor communications and helping investors access the digital platforms through which DIGIT will be available.
The Bank of England has also confirmed regulatory approval for a link between HSBC and LSEG’s Digital Securities Depositories. The world-first link will give investors the option of accessing DIGIT through either infrastructure, helping reduce fragmentation between digital platforms and support wider participation in the pilot.
Together, the announcements provide greater certainty for investors ahead of the planned pilot issuance, which is expected to take place by Q1 2027.
DIGIT is a key part of the government’s Wholesale Financial Markets Digital Strategy and will test how distributed ledger technology can be used in UK sovereign debt issuance.
Lucy Rigby KC MP, Economic Secretary to the Treasury, said:
Digitalisation is central to ensuring the UK remains a global hub for digital assets, and DIGIT is an important part of putting that ambition into practice.
Today’s announcements take us another step closer to issuing the UK’s first digitally native government bond early next year, while supporting further innovation in our financial markets.
The world-first link between HSBC and LSEG’s platforms shows the UK is at the forefront of developing the financial infrastructure of the future.
Lead Manager roles
The six Joint Lead Managers, appointed in October following a competitive procurement process, have been allocated the following responsibilities:
- HSBC: Documentation Manager; Settlement Manager; Billing and Delivery Manager; Bookbuilding
- RBC Capital Markets and Barclays: Roadshow Coordinator and market communications
- Lloyds: Press and external communications
- NatWest and Morgan Stanley: Platform Coordinator
The Platform Coordinator is a new Lead Manager role created for DIGIT. NatWest and Morgan Stanley will support investors through the process of joining and using their chosen digital platform ahead of the pilot issuance.
Improving investor access
The government committed at Mansion House last year to ensuring DIGIT supports interoperability between digital platforms and provides effective investor access.
Following regulatory approval from the Bank of England, the link between HSBC and LSEG’s respective Digital Securities Depositories will provide an additional way for investors to access DIGIT.
Under the arrangement, HSBC Orion will act as the issuer Digital Securities Depository, while LSEG B3 will act as an investor Digital Securities Depository.
This means investors will be able to access DIGIT through either infrastructure, helping reduce fragmentation between digital platforms and supporting broader participation in the pilot.
The DIGIT pilot
DIGIT will help the government explore how distributed ledger technology can be applied to UK sovereign debt issuance and support the development and adoption of digital financial infrastructure in the UK.
The pilot will:
- enable the government to explore how distributed ledger technology can be applied to UK sovereign debt issuance processes; and
- support the development of UK-based distributed ledger technology infrastructure and its adoption across UK financial markets.
DIGIT will be digitally native and short-dated, and will be issued on a platform operating within the Digital Securities Sandbox. It will use on-chain settlement and will sit outside the government’s main debt management programme.