Guotai Junan International (GTJAI) plans to issue various types of tokenized securities in Hong Kong. The company is a subsidiary of Guotai Haitong Group, China’s largest securities brokerage, which is State-backed.
The company aims to use DLT for issuance, trading and custody as well as to enable greater personalization for wealth management products. Given its ownership, the news is notable, as China has plans to create ten large securities brokers and have two or three global scale investment banks or institutions by 2035.
GTJAI said it submitted business plans to Hong Kong’s Securities and Futures Commission and received an email saying there are no further questions, which is taken as approval.
It is planning two groups of activities. One is to participate in the issuance of digital bonds and the other involves structured products. These are tokenized securities linked to other assets such as over the counter derivatives, structured notes, funds and bonds.
GTJAI’s approach to structured products follows precedents set by other market players globally. The Deutsche Börse has its D7 digital securities platform, which is underpinned by smart contracts and blockchain but so far has mainly issued in a centralized manner. D7 is heavily used by a securities firm to issue hundreds of thousands of structured products in an automated fashion, making issuance far more cost effective.
Regarding digital bonds, it hopes to become the overall coordinator of some bond issuances and even a “settlement bank” in future bond issuance projects. This aligns with Hong Kong’s strategy of subsidizing digital bond issuance costs to promote the location as a preferred venue, a model Singapore has recently adopted as well
GTJAI’s tokenization initiative represents a significant step in China’s broader strategy to develop globally competitive financial institutions by 2035, while positioning Hong Kong as a digital securities hub.
