[NEWS] Osaka Digital Exchange begins Japan's first security token trading

Osaka Digital Exchange (ODX) began trading in security tokens (ST) on the 25th, the first of its kind in Japan.

Osaka Digital Exchange stated, "Recently, the ST issuance market has seen a steady increase in issuance amounts, with large-scale projects being launched one after another," and emphasized that it will work with trading participants and supporters to ensure that its private ST trading system, START, contributes to the further development of the ST market.

According to the announcement, START's matching system uses AWS (Amazon Web Services) cloud services. In the future, the company explained that it is looking toward straight-through processing (STP) by linking with the blockchain, which is the ST issuance platform.

Two stocks will be traded at the start of the service

Two STs specialized in real estate will be traded at the start of the service. The first will be the public offering real estate STs "Kenedix Realty Token Dormy Inn Kobe Motomachi (digital name change method)" and "Ichigo Residence Token - Shibakoen, Higashi-Shinjuku, Toritsu Daigaku, Monzen-Nakacho, Takaido, Shinkoiwa - (digital name change method)".

On the same day, Sumitomo Mitsui Finance and Leasing (SMFL) also announced that its strategic subsidiary SMFL Mirai Partners, Kenedix, SMBC Trust Bank, Daiwa Securities, and Sumitomo Mitsui Banking Corporation have begun trading "Kenedix Realty Token Dormy Inn Kobe Motomachi (digital name change method)" on START.

The ST is backed by the hotel "Natural Hot Spring Romanyu Dormy Inn Kobe Motomachi" owned by SMFL Mirai Partners. 95% of the quasi-common areas of the property will be transferred to a special purpose company managed by Kenedix, and SMFL Mirai Partners will continue to hold 5% of the quasi-common areas of the property. They will stably manage the property together with Kyoritsu Maintenance Co., which operates Dormy Inn Kobe Motomachi.

When conducting secondary transactions, this ST will allow financial instruments traders to act as intermediaries to START, in addition to the method of having a financial instruments trader act as the counterparty, as with conventional real estate STs. This is expected to diversify transaction methods, improve the transparency of transaction prices, and improve convenience for investors.

Furthermore, they stated that they will provide new investment opportunities through collaboration across industries, support the resolution of the current social issue of "shifting from savings to investment," and contribute to diversifying the fundraising methods of property contributors by expanding investment management products backed by real estate and other assets.

In the "Creating New Core Businesses" strategy of its medium-term management plan, the SMFL Group has set "asset turnover business (liquidation and securitization)" as a measure. So far, two STs have been issued with Kenedix.

Kenedix is ​​one of the largest real estate asset management companies in Japan, managing real estate worth over 3 trillion yen, and in August 2021, it conducted a real estate security token offering to raise funds by issuing Japan's first real estate ST.

"Ichigo Residence Token - Shibakoen, Higashi-Shinjuku, Toritsu Daigaku, Monzen-Nakacho, Takaido, Shinkoiwa - (Digital Name Transfer Method)" is an ST that Ichigo will publicly offer and operate together with Mitsubishi UFJ Trust and Banking Corporation and SBI Securities.

This ST will utilize Progmat, Inc.'s digital asset issuance and management platform.

Reference:ODX announcement,SMFL announcement
Image: Shutterstock

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