[Digital Securities Forum 2023]Contributing to security token (ST) market expansion | CoinDesk JAPAN

N.Avenue Co., Ltd., the operating company of CoinDesk JAPAN, will co-host the “Digital Securities Forum 2023” on Wednesday, December 13, 2023 with Nihon Keizai Shimbun.

The progress of digitalization is accelerating in the investment world. The digital securities “security token” (ST) market is expanding. We asked Atsushi Itaya, Managing Executive Officer of Daiwa Securities Group, Daiwa Securities, how to respond to changes in the market and investment behavior predicted by the digitalization of assets.

Daiwa Securities Group Headquarters/Daiwa Securities
Managing Executive Officer
Mr. Atsushi Itaya

In 2014, served as General Manager of Human Resources at Daiwa Securities Group Headquarters, and in 2019 served as Deputy Personnel Manager and Deputy Planning Officer at the same company.In 2021, served as Deputy Planning Officer and Deputy IT Operations Officer at Daiwa Securities Group, and worked across the Daiwa Securities Group regarding security tokens. Launched the project and will lead the real estate security token offering projects that Daiwa Securities has undertaken to date. He is a director of the Japan STO Association.

What are the elements necessary for market expansion?

The 2020 revision of the Financial Instruments and Exchange Act clarified the basic regulations regarding ST, including investor protection, and clarified the role that financial institutions should play.

For investors, real estate assets, which had a different risk profile than stocks and bonds, can now be invested in with a relatively small amount as a financial product, expanding the options for building a portfolio.

There are three factors that will drive future market expansion: development of secondary markets, expansion of target assets, and digital currency.

First, as secondary markets are developed (ODX, etc.), convenience for investors will increase, and an increasing number of issuers will become interested in STs, which have lower costs as a means of securitization other than REITs. That’s what I think.
Second, as the number of assets other than real estate increases in the future, we can expect a virtuous cycle of an increase in the number of issuers and a broadening of the investor base. The third point is digital currency. We believe that if digital currency is realized as a more efficient payment and dividend administration, it will lead to lower securitization costs, which will be returned to investors, leading to further market expansion.

Providing excellent assets other than real estate ST

The Daiwa Securities Group believes that the significance of dealing with ST is “(1) Providing new alternative investment methods to customers,” “(2) Providing new financing methods to asset-holding companies,” and “(3) Creating group synergies.” Until now, we have been leading the underwriting issuance of ST backed by real estate and providing it to our customers.

In the future, we are considering target assets other than real estate.For example, renewable energy-related equipment such as solar power plants with stable income and high financing needs will be of great interest to investors if they can be converted to ST. I think it might become a product. By turning these high-quality assets into STs and making them available to a large number of customers, we hope to further expand the range of asset management for our customers.

Although the ST business is still a new field, I think it can be expected to expand significantly. By collaborating with companies within the industry and technologically capable companies with new ideas, we believe that the ST market will become more convenient and attractive to investors, and will develop into a larger market.

｜Reprinted from Nihon Keizai Shimbun “Digital Securities Forum 2023 Advertising Special” dated December 8, 2023
｜Image: CoinDesk JAPAN