Cathay Securities Secures First-Ever Approval for STO Business in Taiwan
Taiwan’s Cathay Securities has received regulatory approval from the Financial Supervisory Commission (金管會) to launch its Security Token Offering (STO) business. This approval marks a historic moment as Cathay Securities becomes the first securities firm in Taiwan authorized to delve into the world of STO.
The inaugural STO from Cathay Securities features a 6-year debt offering in the realm of green energy. Partnering with “陽光伏特家” (Sunshine Photovoltaic), the parent company of the leading renewable energy retailer “綠點能創” (Green Dot Energy), Cathay Securities aims to raise an estimated US$1.86 million through the “陽光綠益債務型STO” (Sunshine Green Benefit Debt STO). The STO offers a compelling annual interest rate of 3.5%, adopting a mechanism that combines yearly dividends and maturity repayment.
Cathay Securities’ digital assets manager, 陳純懿 (Chen Chun-yi), revealed that the STO aims to attract institutional investors by providing favorable conditions for purchasing green energy. Investors participating in the STO before December 8th may enjoy an increased annual interest rate of up to 5.8%. The fundraising period extends until December 12th, with official trading scheduled to commence on Cathay Securities’ proprietary STO platform.
Chairman of Cathay Securities, 莊順裕 (Zhuang Shun-yu), emphasized the global trend of STOs, highlighting regulatory frameworks in over 10 major markets, including Taiwan, the United States, Singapore, Hong Kong, and the United Kingdom. The establishment of STO regulations by the Financial Supervisory Commission in 2019 paved the way for securities firms to engage in STO activities, fostering a stable development of the STO ecosystem.
Compared to traditional Initial Public Offerings (IPOs) in the financial market, Security Token Offerings (STOs) leverage blockchain technology to tokenize securities, enabling digital storage, exchange, and transfer of value. STOs encompass investments where contributors expect returns based on the efforts of the issuer or a third party.
Cathay Securities, in collaboration with Cathay Financial Holdings’ blockchain team, has developed its STO trading platform, encompassing issuance, negotiation, reporting, settlement, internal control, and risk management mechanisms. This platform provides an alternative fundraising channel for enterprises beyond conventional listings, allowing them to issue STOs and raise funds from professional investors.
To establish a reliable pricing mechanism for STO interest rates, Cathay Securities collaborated with globally recognized risk management technology firm Numerix and Professor 葉宗穎 (Yeh Tsung-yung) from Chung Hsing University. Together, they developed Taiwan’s first STO valuation model capable of accurately calculating default probabilities for small and medium-sized enterprises, boasting an impressive accuracy rate of 95%.
Cathay Financial Holdings’ Senior Vice President, 姚旭杰 (Yao Hsu-chieh), expressed that Cathay Securities’ approval to engage in STO business represents the company’s initial foray into the realm of digital assets.
As the world witnesses numerous successful STO cases, Cathay Securities places significant emphasis on innovative technology and business development. The STO trading platform, operating under financial regulatory oversight, incorporates robust information security management mechanisms to ensure a secure investment environment for participants.
Cathay Securities, guided by customer demand, is dedicated to establishing a user-friendly digital investment platform that offers a seamless investment experience. As of the end of October, the platform has attracted over a million customers.
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