After receiving regulatory approval in November, Japan’s Osaka Digital Exchange (ODX) plans to start trading digital securities on Christmas Day. Today it shared the launch details of its security token venue START. During the first quarter it will offer discounted fees and just a single digital security can be traded at launch.
SBI PTS (proprietary trading system) is the majority shareholder of ODX, which started trading conventional securities last year. Other key backers include SMBC, Nomura, Daiwa Securities and Cboe Worldwide.
To date a large proportion of Japanese security tokens have been for real estate and used the Progmat tokenization platform, initially developed by MUFG. Hence, it’s no surprise that the first security to be traded fits that profile with MUFG as the trustee. The asset manager is ICHIGO Owners a subsidiary of ICHIGO Investment Advisors.
The issuance value of the token is expected to be JPY 2.925 billion ($20m), backed by assets of JPY 8.956 billion ($63 million).
Traders can place orders on ODX 365 days a year. However, orders are only matched twice a day at 11.30 and 3pm Japan Time. One of the most surprising features is ODX supports both in person trading and a web based interface. Fees are lower on the web based platform at 0.5% for buyers and 2% for sellers. The buyers fee is waved until March 29, 2024 and the sellers fees are reduced, but only for web transactions.
The need for digital securities secondary markets
While a few startups have secondary markets for security tokens (eg. Securitize, ADDX), this is just the second launched by major institutions. The first was Switzerland’s SIX Digital Exchange (SDX) which started trading two years ago. Providing secondary markets for digital securities is seen as one of the key building blocks to enabling blockchain-based securities to flourish. Other important building blocks are on chain settlement and interoperability.
