Korean brokerages step up tokenised securities business beyond fractional investing to bonds, funds
South Korean brokerages are shifting their focus from fractional investment management to building robust issuance infrastructure for standardized financial products like bonds and funds. The Financial Services Commission announced a phased policy on September 4, 2024, to support the tokenization of private MMFs, corporate bonds, and unlisted shares, with a full system rollout scheduled for February 4, 2027. To facilitate this, Koscom is developing the 'KoSTO' platform in collaboration with 12 major brokerages to standardize issuance and ledger management. Individual firms like Korea Investment & Securities and Shinhan Investment Corp are also developing proprietary platforms to integrate with existing account systems. This transition marks a significant evolution in the South Korean RWA market, moving toward institutional-grade on-chain financial services. By leveraging distributed ledger technology, these firms aim to enhance market efficiency and align with global trends seen in Japan and the United States. The ability to integrate these new systems with existing payment and account infrastructure is expected to be the primary driver of competitive advantage for these financial institutions.
- South Korea's tokenized securities system will officially take effect on February 4, 2027.
- Koscom is building 'KoSTO', a joint issuance platform involving 12 major South Korean brokerages.
- Phased rollout includes private MMFs, corporate bonds, unlisted shares, and fractional investment securities.
- Mirae Asset Securities previously issued 100 billion won in digital bonds via HSBC's Orion platform.
Tokenized securities represent the digital transformation of traditional financial assets, where ownership rights are recorded on a distributed ledger rather than through legacy paper-based systems. This process allows for fractional ownership, increased liquidity, and automated settlement through smart contracts. By moving assets on-chain, financial institutions can reduce administrative overhead and provide investors with more efficient access to diverse asset classes.