Securities Firms Stand to Benefit
The author is an analyst of NH Investment & Securities. She can be reached at yd.yoon@nhqv.com. -- Ed.
STO market to facilitate expansion of conventional financial market
On Feb 5, financial authorities announced their STO guidelines, intending to complement the existing financial regulatory sandbox regime and regulate security token issuance and trading. Following institutional overhaul, investors are expected to trade security tokens primarily on platforms operated by securities firms.
Upon the FSC’s publishing of new guidelines on security tokens, domestic digital asset market participants paid keen attention to whether existing digital assets are to qualify as digital securities. However, the guidelines do not include specific criteria for qualifying as a security token or categorize any specific digital assets as securities. In our view, the main purpose of the guidelines is to expand the boundary of conventional financial markets through the utilization of blockchain technologies rather than to review the existing digital asset market.
Market showing interest in securities firms in charge of token trading
The STO value chain is broadly comprised of token issuance, trading, custody, and solutions, with the market showing keen interest in securities firms that are to run OTC trading platforms. Attention should be drawn more to conventional financial institutions responsible for token trading than to startups in charge of token issuance. In the process of converging the conventional financial and digital industries, those who already boast hegemony with respect to infrastructure and financial services are bound to gain an upper hand over others.
Among players in STO value chain, securities firms to be primary beneficiaries
In conclusion, securities firms are expected to be the primary beneficiaries as they boast greater accessibility, convenience, and creditability compared to digital asset startups. While short-term earnings benefit from the business is unlikely to be major, the new business is expected to be utilized as a means to expand securities firms’ MAUs, particularly on their mobile trading system (MTS) platforms.
Recommend Kiwoom Securities and Hanwha I&S
In the STO value chain, we find Kiwoom Securities and Hanwha I&S attractive. Thanks to its strong appeal to retail investors, Kiwoom Securities is better suited for security token operations than peers. Also, the company has already worked together with a number of digital asset startups. Meanwhile, partnering up with Dunamu and Lambda256, Hanwha I&S has been preparing to launch its own blockchain business. Committed to new product development for the security token business, the firm’s competitive edge in new businesses is expected to shine.