Yesterday Japanese stock exchange JPX announced the creation of a new digital subsidiary JPX Market Innovation & Research, or JPX Research Institute for short. The operator of the Tokyo Stock Exchange will focus on data and index services but will also include blockchain and distributed ledger technology. The business will commence in April 2022. However, the initial capital allocated to the subsidiary is just Yen 100 million (less than $1m).
JPX said it wanted to foster a different culture not constrained by a traditional exchange framework. “Changes in the external environment are rapidly proceeding, such as the movement toward creating a market that is separate from the traditional financial and capital market frameworks using new digital technologies such as blockchain,” said the company in a statement.
Last year the company was involved in a blockchain-pilot for post-trade.
There are already multiple blockchain-based securities platforms in progress in Japan, although most will not compete directly with JPX. And at this stage, it’s unclear whether JPX Research will focus on blockchain for post-trade processes or natively digital securities. The latter is the emphasis of several Japanese initiatives such as MUFG’s Progmat platform for security tokens and SBI”s Osaka Digital Exchange where SMBC, Nomura and Daiwa are also shareholders.
There’s also Nomura’s BOOSTRY platform initially targeting bonds, where SBI has a stake, and SBI has already used the platform for a security token offering. And Tokai Tokyo has partnered with Singapore blockchain securities platform ADDX to target the Japanese market. ADDX (formerly iSTOX) has been in production in Singapore for some time and is backed by Singapore’s stock exchange SGX.
Meanwhile, outside of Japan, SGX has a digital securities joint venture Marketnode, in which many big banks are participating. And Switzerland’s SIX launched its SIX Digital Exchange (SDX) last week.
All these described initiatives are targeting natively digital securities. But some stock exchanges are more focused on blockchain’s potential in post-trade. Examples include ASX and its reinvented blockchain-based post-trade platform CHESS, and the HKEX. In the United States, the DTCC is planning a 2022 go-live for its blockchain-based stock settlement Project Ion.