The Osaka Digital Exchange (ODX) is planning to launch a secondary market for digital securities this year. Yesterday Japan’s Financial Services Agency gave ODX approval to launch the Securities Token Proprietary Trading System (ST PTS). This is similar to the Alternative Trading System (ATS) license in the United States.
START is the new brand for the securities token market.
ODX was founded by SBI and launched last year trading conventional securities. Last week ODX announced a funding round including new investors Cboe and market makers Virtu and Optiver. Other existing backers are SMBC, Nomura and Daiwa.
Update: on Monday ODX confirmed the launch date is December 25. SBI Securities announced the first issuance will be a Yen 2,925 million ($19.7m) real estate security token issued by Ichigo. It will use the MUFG Progmat tokenization platform. One of Progmat’s backers is SBI PTS, the parent of ODX.
Institutional secondary markets for digital securities are few and far between. In Switzerland, SIX launched its SIX Digital Exchange (SDX) two years ago. SBI and SIX have a joint venture in Singapore, Asianext, which received a license as a Recognised Market Operator in September. For on chain settlement AsiaNext is awaiting a license as a Major Payment Institution.
A global digital securities secondary market?
More than two years ago, SBI Group’s CEO Yoshitaka Kitao outlined his vision of creating a global secondary market for digital securities. Three of the pillars were SDX, ODX and Asianext, with Boerse Stuttgart Digital Exchange (BSDEX) in Germany as a fourth. SBI is a minority shareholder in Börse Stuttgart Digital.
A wild guess might see Cboe as a fifth pillar. Cboe has an ATS license but its main digital activities to date have been around cryptocurrencies with its acquisition of ErisX as part of Cboe Digital.
That said, SBI is also very active in crypto, owning the B2C2 market maker which has a stake in Cboe Digital. SBI also runs a crypto exchange, a Bitcoin miner and an NFT marketplace.
Meanwhile, Europe and the UK are exploring the potential to relax laws around digital securities allowing operators to manage the trading and registration of securities on the same infrastructure (blockchain). That’s through the EU’s DLT Pilot Regime and the UK’s Digital Securities Sandbox.
