The UK government has appointed six banks to lead its first digital gilt issuance, advancing a pilot expected to take place by the first quarter of 2027. The institutions will handle underwriting, investor engagement and distribution as the government tests digital infrastructure for sovereign debt.
HM Treasury announced on Oct. 6 that Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets will serve as joint lead managers for the Digital Gilt Instrument, known as DIGIT.
The appointments followed a competitive procurement process and allow engagement with potential investors to begin. Economic Secretary to the Treasury Lucy Rigby announced the selection during her keynote address at UK Digital Assets Week.
DIGIT is designed as a short-dated bond issued directly on digital infrastructure. It will use onchain settlement and operate through a platform inside the UK’s Digital Securities Sandbox. The pilot will remain separate from the government’s main debt management programme.
Six banks will manage the sale and investor engagement
Under the Treasury’s mandate, the six selected institutions will provide underwriting services, support discussions with investors and distribute DIGIT when it is issued.
The department said suppliers were assessed against transparent and objective criteria during the selection process.
The structure gives Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets roles in preparing the transaction and connecting the pilot with investors before issuance.
For the bond itself, the Treasury has specified a short-dated instrument issued directly through digital infrastructure. Settlement will occur onchain, while the platform supporting the transaction will operate within the Digital Securities Sandbox.
The transaction’s independence from the government’s principal debt management programme distinguishes the pilot from conventional gilt issuance. DIGIT is being used specifically to test new financial market infrastructure rather than replace the broader programme.
Rigby said the government intends to list DIGIT as the first digital asset on London Stock Exchange Group’s main market.
Preparations are also underway for possible additional issuances, although those plans depend on the success of the initial transaction.
The minister described DIGIT as a practical test of new financial market infrastructure and pointed to issuance early next year.
HSBC Orion will provide the platform for DIGIT
The planned first digital sovereign bond will be denominated in sterling and issued through HSBC’s Orion platform.
The project was initially announced in 2024, while HSBC was appointed as the platform supplier in February 2026.
The Treasury previously said the pilot would examine whether distributed ledger technology could shorten settlement times, reduce reconciliation work and lower operating costs.
The project therefore extends beyond the digital representation of the bond itself. Its infrastructure is intended to test how issuance and settlement can function through distributed ledger technology within a regulated environment.
Bank of England Governor Andrew Bailey also said the central bank would work toward accepting DIGIT as collateral in its market operations.
According to the Treasury’s latest announcement, HSBC and London Stock Exchange Group signed a memorandum of understanding in July to develop a bilateral Digital Securities Depository link.
Rigby said that connection would allow investors to access DIGIT through either infrastructure.
The planned link adds another component to the pilot by connecting HSBC’s digital platform with LSEG infrastructure rather than requiring investors to rely on only one access route.
Digital securities depositories expand inside the sandbox
Rigby also said HSBC became the first firm approved to operate a live digital securities depository within the Digital Securities Sandbox in July.
ClearToken has subsequently become the second company to receive that approval.
The government plans to introduce secondary legislation over the coming months to support digital services and issuances operating within the sandbox.
These steps form part of the infrastructure surrounding DIGIT as the government prepares for the first issuance.
The sandbox provides the environment in which the bond’s digital infrastructure will operate, while the planned legislation is intended to support the services and issuances conducted there.
The government’s approach combines the appointment of banks responsible for underwriting and distribution with infrastructure providers capable of supporting the digital security itself.
The first transaction will therefore test several parts of the process together, from investor engagement and issuance to digital infrastructure and settlement.
Further issuances remain possible, according to Rigby, but are subject to the performance of the initial pilot rather than being confirmed in advance.
Digital settlement still needs links to existing systems
Tokenovate CEO and founder Richard Baker said the infrastructure test also involves connections between digital securities and established financial systems.
Baker, who sits on HM Treasury’s Wholesale Digital Markets Industry Taskforce, said onchain settlement will need to connect with cash, custody and existing settlement infrastructure.
He also highlighted the importance of common standards and legal certainty to keep lifecycle events consistent across different systems.
According to Baker, building those connections from the beginning could help determine whether tokenization improves liquidity and market efficiency without creating separate digital systems.
The settlement side of DIGIT therefore represents an important part of the pilot alongside the issuance technology.
Previous work on the project’s cash settlement challenge has examined several possible payment options. The Bank of England and Financial Conduct Authority have considered tokenized deposits, regulated stablecoins and central bank money as potential settlement assets.
Those options address how the payment side of a digital securities transaction could connect with the securities side.
Bank of England plans synchronization service for 2028
The Bank of England’s May consultation described a planned synchronization service that would link digital asset ledgers with sterling held in its real-time gross settlement system.
The central bank targeted 2028 for that service.
Its planned structure would allow the securities and payment sides of a transaction to settle together, creating a connection between digital asset ledgers and sterling within the central bank’s existing settlement infrastructure.
The timing means the service is a broader infrastructure development rather than something scheduled specifically for DIGIT’s expected issuance in early 2027.
Other banking tests have already explored ways tokenized money can interact with transactions.
UK Finance said in September that Barclays, Lloyds and NatWest completed two mortgage transactions using tokenized deposits.
Another group of three banks, including HSBC, tested a person-to-person payment connected to a simulated purchase through an online marketplace.
For the mortgage tests, funds remained locked during the property process and were automatically released when completion occurred.
In the marketplace test, payment depended on confirmation that goods had been received, although no physical goods were exchanged during the simulation.
Banks plan three digital bonds using tokenized deposits
Participating banks intend to issue three digital bonds in the first quarter of 2027 that can be traded and settled using tokenized deposits, according to UK Finance payments and innovation managing director Jana Mackintosh.
UK Finance also plans to establish a company, rulebook and governance framework for its deposit project.
These banking initiatives are separate from the government’s DIGIT transaction but illustrate additional work underway around digital bonds, tokenized deposits and settlement infrastructure.
DIGIT itself is expected by the first quarter of 2027 and will use HSBC’s Orion platform within the Digital Securities Sandbox.
The government’s six appointed banks will focus on underwriting, investor discussions and distribution for that sovereign bond pilot.
Meanwhile, the banking tests described by UK Finance are examining tokenized deposits in different transaction structures and preparing for digital bond activity.
Together, the projects highlight the different infrastructure components being tested, while the Treasury’s first digital gilt remains a distinct government pilot independent of the main debt management programme.
U.S. and UK regulators examine cross-border approaches
Related policy work extends beyond the UK’s domestic digital securities infrastructure.
American and British financial regulators are examining common approaches to tokenized markets, including cross-border securities settlement.
Recommendations published by a task force on July 14 called for the U.S. Securities and Exchange Commission, Commodity Futures Trading Commission, Financial Conduct Authority and Bank of England to seek common approaches to the regulatory treatment of tokenized assets.
Their work includes settlement finality and the potential use of stablecoins or tokenized money market funds as margin collateral at central counterparties.
The recommendations also covered cross-border experiments. However, they were presented as policy recommendations rather than enforceable rules.
The two governments intend to engage a private-sector-led group for one year to test cross-border uses of tokenized assets and share practices with officials.
This work expands the policy discussion from domestic digital issuance toward the treatment and settlement of tokenized securities across markets.
Regulated infrastructure could connect more parts of the market
Axiology CEO and former central banker Marius Jurgilas said connecting securities issuance, distribution, trading and settlement through regulated infrastructure could broaden the investor base for those securities and create more funding options.
He added that government support could contribute to establishing a market where capital moves more easily between countries and reaches more issuers.
For DIGIT, the immediate process is more narrowly defined.
The six joint lead managers can begin investor engagement following their appointment, while HSBC’s Orion platform will host the sterling-denominated bond within the Digital Securities Sandbox.
The bilateral Digital Securities Depository link being developed by HSBC and LSEG is intended to give investors access through either infrastructure.
At the same time, work continues on the cash and settlement connections that industry participants consider necessary for digital securities to interact with established financial systems.
The government expects the first issuance by the first quarter of 2027. Any subsequent DIGIT transactions remain dependent on the success of that initial test.
The pilot will therefore provide a practical examination of digital sovereign bond issuance, onchain settlement and regulated market infrastructure while remaining separate from the UK’s principal debt management programme.
