Japan’s ODX exchange to launch digital securities trading

Osaka Digital Exchange (ODX) has received the regulatory approval to launch Japan’s first-ever digital securities trading platform, and it starts operations in a month.

ODX announced that it had obtained approval for operating a securities token proprietary trading system from the country’s Financial Services Agency (FSA). It further revealed that the new platform would be named START and would symbolize the beginning of a new digital era in the Japanese financial space.

ODX was founded in 2021 by two of Japan’s largest financial services conglomerates—Sumitomo Mitsui Banking Corporation, which owns 40% and SBI Holdings, the majority shareholder at 60%. It leverages decentralized ledger technology and seeks to compete with the Tokyo Stock Exchange by having longer operating hours and allowing reduced tick size.

At launch, the digital securities trading platform will debut a ¥3 billion (US$20.1 million) security tokens sale by Ichigo, one of Japan’s largest real estate and renewable energy companies.

Known as the Ichigo Residence Token, it will invest in six “highly convenient rental residential properties with excellent access to the city center and is expected to be the largest issue price ever for an Ichigo Group security token.”

While Ichigo is a multi-billion-dollar giant, the size of its first securities token sale indicates that market players are still testing the technology before investing huge sums of money. Kenedix Inc., yet another real estate asset management giant, will list its token sale on ODX next.

Japan, like many of its Asian peers, has accelerated the digitalization of securities as it seeks to revamp its economy. According to Progmat Inc., a digital securities issuance company whose platform will be used by ODX, Japanese companies have issued 127 billion won ($98 million) worth of securities tokens. Most of it is concentrated in real estate, including hotels and resorts.

Japan faces stiff competition in its bid to become the Asian securities tokens hub from Hong Kong and Singapore. The former is set to roll out a regulatory framework for tokenizing real-world assets in the near future.

Singapore’s central bank is working with the U.K.’s FCA, Switzerland’s FINMA, and Japan’s central bank to ramp up the pace of asset tokenization.

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