SDX CEO Martin Halblaub resigned from his position because of “strategic differences.” This poses the question if the project will see further delays or launch in 2020 as planned.

SDX CEO Martin Halblaub will step down at the end of August after just eight months into the job, according to a memo obtained by Swissinfo. His swift departure took many by surprise, although the exchange downplayed the importance of the announcement, saying it won’t affect the operation or the planned launch in 2020.

Halblaub, who also runs a consulting firm called Successful Boards, will stay at SIX as an adviser. Thomas Kindler will replace him as interim CEO. Kindler is the Deputy Head of Securities and Exchanges at SIX and a “strong” candidate who might replace Halblaub permanently, according to the memo. SIX will launch an executive search to find a permanent replacement. 

SIX will keep SDX under its umbrella

According to the memo, Halblaub and SIX had different ideas of the exchange’s strategic setup. Halblaub wanted to run SDX as an independent company, while SIX wanted to keep it under its umbrella.

Halblaub said, “I have decided with a heavy heart – given our differing ideas on strategy, combined with the stretch the role is for my life model – that I cannot engage in a long term commitment as head of SDX.”

From a business and regulatory perspective, it makes sense if SIX remains the parent of SDX. The success of the digital exchange will not only depend on its ability to build the infrastructure but more on its ability to get other entities to use it. SDX will need to leverage the reputation of SIX and cooperate with its member banks. It also needs regulatory greenlight by FINMA, which will probably be easier if it is considered a SIX branch.

SDX’s path to success won’t be an easy one. The competition is waiting in the starting gates. Swisscom, which has a strong track record of rolling out digital projects in Switzerland’s financial sector, is cooperating with Deutsche Boerse to build a digital trading ecosystem in Switzerland. Thus, SDX will need every competitive advantage they can get.

Moving forward: SDX’s “initial phase” is finalized

SIX CEO Jos Dijsselhof said, “Martin [Halblaub] led SDX through its initial phase with great success. He helped shape SDX’s ambition, strategy, and business model and has built a strong management team around him.  We thank him for his support during this phase.”

Now that this “initial phase” seems concluded, the question is what comes next.

The digital asset exchange was initially slated to launch in the first half of 2019. It was delayed to the second half, and more recently pushed its launch to 2020. The Corda-based technology is ready, and the delay is about deciding which digital assets to launch first, and about regulatory changes in Switzerland.

While it has been relatively quiet around SDX for a while, in recent months, there were positive headlines: Two weeks ago, BlockState announced to passport six ERC-20 tokens to SDX to open up a broader market for issuers to sell security tokens. A representative of the Swiss National Bank also confirmed that the central bank is holding talks with SIX “about different options on how to settle the cash side” of trades.

Whether or not Halblaub’s departure will cause any further delays is not clear, even though SIX denies it. On the flip side, sometimes changes in management can also speed things up, especially if executives were not on the same page.

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