Capital markets News

Tokenise to launch regulated stock exchange for security tokens

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Today Tokenise announced plans to launch a regulated stock exchange in Barbados for security tokens in Q1 2022. As with many current stock exchange regulations, it requires investors to access the tokens via a brokerage and go through anti-money laundering (AML) checks. Hence Barbados registered Tokenise Brokerage is now accepting investor applications. The group also includes UK FCA regulated broker-dealer Kession. 

Security tokens promise to enable access to previously inaccessible investments such as equity in unicorn startups and enable fractional access to a variety of assets. 

The part-time Chairman of holding company Tokenise International is Martin Graham, who until 2009 worked for six years at the London Stock Exchange as Head of Markets and AIM, the small-cap market.

“Opening our waitlist marks the beginning of an exciting journey for Tokenise to really democratise ownership of assets that are important to people,” said Mike Kessler, Tokenise Founder and CEO.

Numerous platforms support security token issuance, with a lack of secondary marketplaces one of the issues holding back the sector. But that’s gradually changing. 

Switzerland’s recently launched SIX Digital Exchange (SDX) is the biggest player on the block. Others include the primary issuance platform Securitize that acquired a FINRA registered alternative trading system (ATS) and SEC-registered broker-dealer. Another organization with similar registrations is Figure Securities, founded by Mike Cagney, which last week said it had managed, raised, and traded over $4.7 billion in equity. In Singapore, ADDX (formerly iStox) is backed by local stock market SGX.

Tokenizing assets

While most other venues have focused on tokenized securities for equity and bonds, it seems Tokenise has its eye on physical assets such as fractional ownership of buildings, ships, racehorses and land. The mention of racehorses is not a casual one. Graham was a non executive Director of the UK’s Sandown Racecourse for five years, although that was some time ago. Tokenise is also interested in royalty tokens for musicians, artists and filmmakers.

Asked about plans outside of physical assets, CEO Kessler responded, “Equities, bonds, funds, etc., can be tokenised and will be coming in the future.”

Using Polymesh blockchain

Tokenise will itself support primary issuances using the Polymesh blockchain and Codel. It also has relationships with multiple primary venues, including Polymath, Stobox and DigiShares, which all use the Polymesh blockchain. However, it expects to be token agnostic for trading purposes in the future.

That’s in part because it uses conventional stock exchange trading software GMEX. 

We asked about tokenizing cash for payments, but at the moment, Tokenise plans to rely on fiat currencies. It has a relationship with the UK’s LinkFX for foreign exchange and BitPanda to convert cryptocurrency payments to fiat.

Tokenise has developed a Central Securities Depositary DigiClear based on the Polymesh blockchain. Barbados registered CSD DigiClear will also record corporate actions such as voting and dividends.

The stock exchange only supports listings via regulated corporate advisers, requiring the usual AML and KYC checks, and also needs the regulator to sign off on the listing prospectus.

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