Securities firms expand partnership with fraction investment platform operators

Kasa promotes its real estate fractional investment platform at its homepage. Screen capture from Kasa's website

By Lee Min-hyung

Big securities firms are in a rush to expand their partnership with fraction investment platform operators after the financial regulator granted approvals for the institutionalization of security tokens trading here.

Security tokens refer to a kind of blockchain-powered cryptocurrency issued to trade fractions of assets. One major characteristic of the token is that a number of investors can fractionally purchase real estate or artworks by means of the investment.

After the Financial Services Commission recently approved of its issuance and distribution, brokerage houses are moving to display their willingness to gain an upper hand in the nascent market by seeking partnerships with existing market players.

Hana Securities and Korea Investment & Securities signed a partnership with Lucentblock, a local startup operating a fractional real estate securities trading platform. Kiwoom Securities also clinched ties with eight small market players ― including Kasa and Musicow ― with a view to generating fresh business models there amid prolonged stock doldrums here and abroad.

Tessa ― an artwork investment platform ― also attracted accumulated investment worth 12.1 billion won ($9.5 million) from brokerage houses such as Kyobo Securities and Kiwoom Securities.

Aside from the partnerships, major securities firms such as KB Securities and Shinhan Securities are also moving to launch their own mobile platforms enabling the trading of security tokens, identifying the market as the next fresh revenue area ― even if it still remains to be seen how robustly the market will grow after the fractional investment becomes more widely available.

KB Securities also reached a partnership with SK C&C in the digital asset business, and both sides ended a pilot test on the issuance and trading of securities tokens last year.

“Brokerage houses are still testing whether the trading of securities tokens is secure enough in their platforms,” an official from the industry said. “The moves can be seen as part of their efforts to diversify their profit structure into non-stock commission areas, as the stock market appears to face uncertainty throughout this year.”