Japan’s first public offering security token bond with fully electronic money interest payments
Daiwa Securities, Rakuten Securities, Rakuten Payment, Mizuho Bank, Mitsubishi UFJ Trust and Banking Corporation and Progmat have announced their cooperation in issuing Japan’s first public offering security token bond (ST Bond) that will pay interest fully in electronic money. If electronic money cannot be granted, all interest may be paid in cash.
Public offering security token bonds are security token bonds for which a securities registration statement or a shelf registration statement and supplementary documents have been submitted to EDINET upon public offering.
The ST Bond will be the first public bond in Japan where the full interest amount (excluding tax) is paid in electronic money. Daiwa Securities and Rakuten Securities will underwrite and publicly offer the ST Bond to individual investors.
The electronic money that individual investors receive as interest on the ST Bond will be “Rakuten Cash” issued by Rakuten Edy, a subsidiary of Rakuten Payment.
The issuance of the ST Bond will utilize “Progmat”, a digital asset issuance and management platform licensed by Progmat.
Outline of the ST Bond
- Name: Daiwa Securities Group Inc. First Unsecured Security Token Bond
- Nickname: Daiwa Securities Group Security Token Bond
- Total bond amount: JPY 1 billion
- Tenor: 1 year
- Payment date: March 21, 2024
- Lead underwriters: Daiwa Securities, Rakuten Securities
- Bond administrator: Mizuho Bank
- Bond registrar: Mitsubishi UFJ Trust Banking Corporation
- Digital bond platform: Progmat
Future Plans
Starting with this ST Bond, the partners will provide new fundraising methods for issuers considering non-cash interest payments from a marketing perspective, as well as attractive investment opportunities for investors, thereby bringing new value to society.
Cooperating Companies
The Daiwa Securities Group is actively working on security tokens and blockchain technology as key technologies to realize its medium-term management plan “Passion for the Best 2023”. Since commercializing real estate security tokens in February 2022, Daiwa Securities has underwritten and offered approximately JPY 297 billion in real estate security tokens, giving it the top share in Japan by underwritten amount as of January 31, 2023.
Regarding initiatives related to digital currencies and digital payments, Daiwa Securities conducted a demonstration test of issuing digital bonds using blockchain technology in February 2021, becoming the first in Japan to successfully issue and redeem digital bonds with digital coins as consideration. Since then, Daiwa Securities Group has participated in the Digital Currency Forum hosted by DeCurret DCP in the “Working Group on Security Token Settlement Operations/System Considerations”, examining practical application of digital currency-based settlement. Daiwa Securities also joined the “CBDC Forum” hosted by the Bank of Japan starting July 2023, contributing to the promotion of a digital society and cashless payments.
Going forward, as a “pioneer in financial and capital markets”, the Daiwa Securities Group will continue to provide issuers with diverse fundraising methods through security tokenization and other leading technologies, and investors with attractive investment opportunities through security tokens, thereby bringing new value to society.
Rakuten Securities and Rakuten Payment provide services enabling investment trust savings through “Rakuten Cash”, the first of their kind in Japan, expanding investment products utilizing cashless payments to support individuals’ asset building and investing activities. The smartphone payment service “Rakuten Pay” operated by Rakuten Payment was ranked first in all six major metrics including “Customer Satisfaction” in the 2023 2nd Japan Customer Satisfaction Index survey’s QR code payment category, leading the cashless payment industry. Rakuten Securities had over 10 million accounts by the end of 2023, and launched “Bond Market®” in July 2023, a platform with a search function and constantly 200 or more corporate bonds available, providing customers with a convenient bond trading environment. Through this ST Bond, Rakuten Securities and Rakuten Payment will continue contributing to the promotion of cashless payment penetration and customers’ asset building and investment activities.
As the top bank for public bond trustee services, Mizuho Bank has leveraged its longtime experience to lead the development of bond administration and funds settlement operations for security token bonds. We hope to further contribute to energizing and developing the security token bond market through this ST Bond.
Mitsubishi UFJ Trust Bank (MUTB) will administer the bond registry and provide custody of secret keys for this ST Bond using “Progmat” licensed by Progmat. With the issuance of this ST Bond, projects using “Progmat” will total 23 cases, with total assets under registry administration of approximately JPY 122.9 billion. MUTB will continue contributing to improving customer convenience and further expanding the digital securities market through this cooperation.
“Progmat” licensed by Progmat already has the top track record in Japan of 21 cases of public real estate security tokens and 2 cases of public bond security tokens including this ST Bond. Also, Rakuten Securities newly adopting “Progmat” for this ST Bond will bring the total securities companies using it to 9, making it first in Japan in network expansion as well.
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