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With the tokenized securities (STO) system set to take effect next February, securities firms are accelerating the expansion of their related businesses. While they previously focused on building the technological infrastructure for issuing tokenized securities, they have recently begun moving to expand their business scope to include the distribution of tokenized assets and their use as collateral. As the regulatory framework takes shape and the range of assets eligible for tokenization and their potential uses are expected to expand, firms appear to be seeking to establish a business foundation in advance.

According to the financial investment industry on Nov. 1, the New York subsidiary of Mirae Asset Securities recently signed an agreement to use the DTCC Tokenization Service (DTS) offered by U.S. financial market infrastructure provider DTCC, securing a foundation for using the service. Hanwha Investment & Securities formed a strategic partnership with Chainlink, a global blockchain data infrastructure company, to build infrastructure for tokenizing high-quality real-world assets, distributing them in global markets, verifying their value and using them as collateral.

Expectations of market growth following the institutionalization of tokenized securities are behind securities firms' moves to expand their businesses. Amendments to the Act on Electronic Registration of Stocks and Bonds and the Financial Investment Services and Capital Markets Act passed the National Assembly in January, and the revised laws will take effect on Feb. 4 next year. Financial authorities are accepting public comments on proposed amendments to the relevant enforcement decrees and financial investment business regulations through Nov. 11. In the initial stages of implementation, the tokenization of private money market funds (MMFs) exclusively for institutional investors and corporate bonds, as well as the tokenization of unlisted stocks through trusts, is expected to proceed in phases.

Mirae Asset Securities is expanding the ways tokenized securities can be used. Its New York subsidiary signed an agreement to use DTCC's DTS on Oct. 30, joining 20 institutions that signed initial user agreements, alongside JPMorgan, Morgan Stanley, Bank of America and Citi.

DTS is a service that represents rights to eligible securities held at DTCC subsidiary The Depository Trust Company (DTC) as blockchain-based tokens. It supports conversion between conventional and tokenized securities and the movement of assets, providing a foundation for their future use as collateral and for other purposes.

"Participation in DTS will serve as an opportunity to expand the potential uses of tokenized securities," a Mirae Asset Securities official said. "We plan to connect traditional finance with digital assets and explore new ways to use them in conjunction with our existing businesses."

Hanwha Investment & Securities is working to establish infrastructure for tokenizing real-world assets, distributing them in global markets and using them as collateral. The company plans to apply Chainlink's data standard technology and Cross-Chain Interoperability Protocol (CCIP) to the digital asset platform it is developing, establishing a foundation for verifying asset values and connecting tokenized assets across different blockchains.

The two companies also plan to develop valuation and reserve verification standards for using real-world assets (RWAs) as collateral, as well as technology and compliance standards aligned with the institutionalization of tokenized securities in South Korea.

Industry observers expect competition among securities firms to expand beyond simply building issuance platforms toward connecting distribution, custody and global networks as the regulatory framework for tokenized securities becomes more concrete.

"Competition in infrastructure is expanding from individual issuance platforms toward connecting existing securities accounts and settlement networks with wallets, custody services and global blockchain networks," said Kim Ji-won, an analyst at KB Securities.

However, the impact on securities firms' earnings is expected to be limited in the early stages of implementation because the market is not expected to be large.

"Current investment in related infrastructure is closer to an upfront investment aimed at gaining an early foothold in the future market for tokenized conventional securities, such as publicly offered bonds and funds," said Hong Jin-hyun, an analyst at Samsung Securities. "Competitiveness depends less on owning a proprietary blockchain than on how effectively firms can connect everything from sourcing to distribution."

                                                                                                              Park Ju-yeon