Osaka Digital Exchange launches digital securities platform

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Japan-based Osaka Digital Exchange (ODX) has launched its digital securities platform, START, a propriety trading system (PTS) for security tokens.

The launch came barely a month after receiving the green light from Japan’s Financial Services Agency (FSA) for the PTS operation.

Prior to the launch, initial reports stated the platform would debut with two digital securities.

The first token issuance worth JPY 2.925 billion (US$20 million) comes from ICHIGO Asset Managers, while the other is from Kenedix Investment Partners worth JPY 3.361 billion (US$24 million). ICHIGO’s offering relies on Megabank Mitsubishi UFJ Financial Group’s (MUFG) Progmat Coin, while Kenedix says it will leverage iBet for Fin, BOOSTRY’s issuance platform.

Operating in a manner similar to the Alternative Trading System (ATS), ODX’s platform will allow users to trade digital securities in secondary markets throughout the year. But unlike a 24/7 service, the exchange will accept trades in two phases each day, with the matching of orders taking place twice per day.

Further details indicated that initial settlements will not lean on delivery versus payment (DvP), unlike other digital securities platforms, but will make use of conventional payments. To adoption levels, ODX will not charge zero fees for buyers until the end of Q1 of 2024 while seller fees are heavily discounted for web-based transactions.

“We will dedicate our best efforts to collaborate with our participants and supporters (i.e., platform providers) so that the secondary market ‘START’ can contribute to the further development of the security tokens market,” ODX said in a statement.

Experts have described ODX’s launch as a decisive factor in moving the needle for the widespread adoption of digital securities based on blockchain technology.

Security tokens gather steam in Japan

In recent months, the concept of security tokens in Japan has garnered significant interest from leading financial institutions in Japan. Regulatory clarity from Japanese authorities has contributed its fair share to the spike in interest with MUFG, Daiwa Securities (NASDAQ: DSECF), and Nomura (NASDAQ: NRSCF) announcing consortiums to explore the offering.

On a global stage, South Korea and Taiwan are developing security tokens, with Korean regulators pushing out a new regulatory framework and a pilot regime.

“In addition, even before the legal foundation is complete, we will first create a pilot market through the financial regulation sandbox while taking the results into consideration to promote formal institutionalization,” said the Korean Financial Services Commission (FSC).

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