Popular Security Token Exchanges around the World
Security Tokens Series (5 part series — Part 5)
If you have been trading securities for a while, perhaps you may have already had your share of challenges associated with the conventional approach to trading securities. Among many other downsides, the traditional electronic trading that has been here since the 1980s is slow and lacks transparency.
The good news is that contemporary decentralized Blockchain solutions can eliminate most of these problems and revolutionize security trading. Blockchain technology enables transaction and ownership records to be stored on a shared database which cannot be tampered with or even corrupted.
On the Blockchain network, tokens can be used to provide access to services offered on a platform as well as make purchases. Therefore, tokenization of securities implies that financial assets such as equities, bonds, futures and stocks, can be transacted through use of digital tokens.
In this post, we shall explore popular exchanges you may want to consider the next time you are trading securities:
CEZEX.IO
An upcoming security token exchange to watch out for this end of the year is CEZEX. CEZEX is Asia’s first licensed digital assets exchange platform for asset-backed securities tokens based in CEZA(Cagayan Economic Special Zone), a special economic zone in the Philippines.
CEZEX provides market participants access to tokenized assets through the operation of a regulated market. Thus, bridging the gap between traditional financial markets and cryptocurrency markets.
Currently, they are conducting an exclusive financing round to raise capital of up to USD $20M. The capital will be used for operating the exchange platform, further development of IT systems and technology infrastructure, investments in marketing and sales, setup of back office systems and the establishment of an accelerator fund for digitalization of assets.
Their exchange operating system, listing platform and trading APIs have already been developed and launch of security tokens is about to happen in this last quarter of 2018.
T ZERO
T zero is a subsidiary of Overstock.com, and it can be found online as TZero.com. The platform seeks to integrate conventional stock markets with the value that Blockchain technology can offer.
While T Zero has been in the Blockchain ecosystem since 2015, the company released its first product on the 4th of October, 2017. T zero will facilitate the trading of Security tokens that are issued through ICOs. In particular, this platform seeks to be the haven of ICOs that are compliant with FINRA and SEC regulations.
Currently, T Zero services include; stock inventory management systems, brokerage services and smart ordering routing services. Thanks to its network of over 100 brokerages as well as a trading platform that is operational around the clock. In addition to the tradition equities, the company plan to integrate a crypto token trading system for digital securities.
The platform will use a security token referred to as tZERO. Token holders will be paid 10% of adjusted gross revenues on a quarterly basis.
Gibraltar Blockchain Exchange (GBX)
The next exchange that capital markets enthusiast should be on the lookout for is Gibraltar Blockchain Exchange (GBX). The company brands themselves as the global leading institutional grade token sale platform build upon the principles of decentralization and community consensus.
GBX is a subsidiary of the Gibraltar Stock Exchange which is an EU-regulated stock exchange institution launched back in 2015. And since then, the company has expressed great interest in the use of Blockchain technology to facilitate trading.
In August 2017, they launched Gibraltar Blockchain Exchange. The platform aims to help traditional investors to trade stocks through the use of tokens. And to ensure investor safety, a group called GBX Alliance vets every coin before it’s listed on the platform.
Other attributes that are unique to this platform include; a sponsor staking regime as well as a diligent whitelisting procedure. Here, all the available investor pools will only comprise of KYC/AML certified investors.
To use Gibraltar Blockchain Exchange platform, you will need Rock Token (RTK). RTK is the medium of exchange here. It is the currency powering transactions, listings, and any other transactions on the GBX ecosystem.
Templum
Templum was launched in October 2017 and can be accessed through TradeTemplum.com. This startup seeks to open doors for companies to launch tokenized securities in the US markets.
Overall, Templum will support; trading of ICOs as securities and users can also issue new tokens through ICOs on the platform. These functions are governed by US securities laws.
Templum is compliant to regulations from agencies such as Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC).
Early this year, Templum executed its first SEC-compliant transaction; where two institutions traded BCAP tokens issued by Blockchain Capital LLC (a digital assets investment firm). You can read more about it here.
OpenFinance Network (OFN)
U.S. based OpenFinance Network (OFN) has also curved its unique niche by attending to secondary markets for alternative assets.
Since 2014, OFN team of leading brokerage houses, transfer agents, banks, and custodians have been working together to offer more effective clearing, trading, and settlement services.
Recently, they shifted their attention to providing Blockchain solutions. To facilitate this shift, OFN works under SEC compliant standards that will enable exchange and issuance of tokenized securities on the Blockchain. It is also worth noting that besides tokenized securities, OFN network can also support traditional tokens and alt assets.
Currently, OFN is accepting the listing of security tokens applications on its newly launched verified compliant security token transaction platform.
OFN’s recent announcement that it plans to start partnerships with key Blockchain industry players such as Securitize, Harbor, Science Blockchain and Republic is a great indication that there is more listing of security tokens in the pipeline. You can read more about this partnership here.
Bancor
Bancor was established in 2017 by the Bprotocol Foundation. The Bancor protocol makes it easier for users to launch their cryptocurrencies on a smart contract- based Blockchain.
In addition, the platform connects several tokens to a single pool of capital, therefore ensures liquidity even in a low transaction volume environment. This liquidity model goes a long way in enhancing movement of securities on the Blockchain.
To create additional ways for tokenized securities holders to liquidate their holdings, Bancor requires her partners to commit to holding portion of their capital on the Bancor network.
A good example of the platforms use case can be drawn from Bancor’s partnership SPiCE VC (a tokenized VC fund). As part of the agreement, Bancor requires SPiCE VC to hold up to 5% of its capital on their Blockchain network.
Due to its high liquidity, Bancor has been described as the long-tail of value creation.
AirSwap
AirSwap, found online as AirSwap.io, promises to offer a better alternative to conventional crypto exchanges by enabling transaction on a global scale and connecting users across markets. This is made possible by the Swap protocol that simultaneously supports off-chain negotiations as well as on-chain settlements. This simply implies that once connected; users can freely communicate, negotiate prices and transmit orders among themselves.
In the context of tokenized securities, AirSwap comes to eliminate the siloed demand and supply dynamics that are often limited by geography or infrastructure; and opens the floodgates for global pooling of capital. This improves liquidity; and the end result is a stable, less volatile demand environment.
Final word
As you can see, security token exchanges are a huge innovation in the crypto sphere. They present a great opportunity for Tokenized Security Offerings (TSOs) as an effective way for companies to source for capital to expand their business and for investors who may want to invest in such companies.
Nonetheless, since most of these platforms are new and still in the early stages of development, low-risk investors may want to wait a little longer and watch on the progress before they invest.
Security Tokens Series (Part 1): 10 Important Things to Know About Security Tokens
Security Tokens Series (Part 2): Security Tokens vs. Utility Tokens — How different are they?
Security Tokens Series (Part 3): Top Security Tokens You Should Watch Out For In 2018
Security Tokens Series (Part 4): Guide To Launch Your Own Security Token
