Koscom, NH Investment & Securities Team Up on Tokenized Securities Platform

Koscom and NH Investment & Securities Co. will work together on a shared platform and new business models as South Korea moves to formalize the market for tokenized securities.

Koscom said on August 13 that it signed a memorandum of understanding with NH Investment & Securities on cooperation in digital assets and tokenized securities businesses.

Under the agreement, NH Investment & Securities will join Koscom’s tokenized securities platform, which is under development. The two companies will jointly test related systems and business processes to prepare for the launch of the framework and the expansion of the digital-asset market.

The partnership will cover system and business-process testing through the shared platform, links between tokenized securities issuance and account management, development of new business models based on digital assets and tokenized securities, and a joint response to regulatory and market changes.

The companies will also examine ways to tokenize conventional securities such as debt and equity instruments. They plan to apply blockchain technology to the issuance and distribution of existing securities to improve efficiency and pursue new business opportunities.

NH Investment & Securities recently set up a digital-asset task force and has begun full-scale preparations for related businesses. The firm plans to use the task force to refine its digital-asset business models and strategy, then expand into areas including the tokenization of conventional securities.

Koscom is building a tokenized securities platform that multiple financial firms can use together, aiming to reduce the burden of system development and duplicate investment for brokerages in the early stages of the market. It is expanding cooperation with Kiwoom Securities Co., Daishin Securities Co., IBK Investment & Securities Co., Yuanta Securities Korea Co., BNK Investment & Securities Co., DB Financial Investment Co., iM Securities Co., Meritz Securities Co., Kyobo Securities Co., Daol Investment & Securities Co. and Woori Investment & Securities Co.

Koscom is also testing related infrastructure. It has built tokenized securities issuance infrastructure with LG CNS and conducted a test-bed demonstration with Korea Securities Depository on total issuance volume management for tokenized securities. The company is also continuing technical tests to link digital assets with existing capital-markets infrastructure, including a proof of concept for tokenized securities settlement using stablecoins.

“A reliable infrastructure that enables market participants to connect in a stable manner is essential for the tokenized securities market to fully open, beyond the competitiveness of individual financial companies alone,” Koscom Chief Executive Officer Yoon Chang-hyun said. Combining NH Investment & Securities’ strengths in brokerage, investment banking and wealth management with Koscom’s capital-markets IT and blockchain technology will help verify the shared platform’s stability and scalability and lay the foundation for the issuance market, he added.

“The incorporation of digital assets into the institutional financial system is expected to reshape not only issuance and distribution in capital markets but financial services more broadly,” NH Investment & Securities Chief Executive Officer Bae Kwang-soo said. He added that the company will work with Koscom to proactively test the infrastructure and business processes needed for tokenized securities businesses and continue identifying opportunities to extend its capital-markets capabilities into digital-based financial services.