Financial authorities decided not to create a separate exchange dedicated only to security token offerings (STOs) and will instead use existing over-the-counter exchanges. Depending on the type of securities underlying the security token offerings (STOs), non-monetary trust revenue securities security token offerings (STOs) will trade on the fractional investment OTC exchange, unlisted stock security token offerings (STOs) on K-OTC, and bond security token offerings (STOs) through bond brokerage specialists.
On the 4th, the Financial Services Commission and the Financial Supervisory Service announced the "Policy direction for security token offerings (STOs)."
◇ Distribution of security token offerings (STOs) will use existing OTC exchanges
Financial authorities decided to distribute security token offerings (STOs) through existing OTC exchanges. If a firm has an existing license for investment services, it may handle security token offerings (STOs) within the scope of that license. However, those seeking to handle security token offerings (STOs) must consult in advance with the Financial Supervisory Service.
Depending on the scope of the license, non-monetary trust revenue securities security token offerings (STOs) will be handled on existing OTC exchanges for unlisted stocks and non-monetary trust revenue securities (fractional investment), unlisted stock security token offerings (STOs) on K-OTC, and bond security token offerings (STOs) through bond brokerage specialists.
Investor protection measures were also prepared. On each OTC exchange, the amount that retail investors can transact is limited to an annual net purchase amount of 100 million won. The net purchase amount is calculated as the annual purchase amount minus the sales amount.
Standards for work related to preventing, monitoring, and taking action against unfair transactions have been prepared to strengthen market surveillance functions at OTC exchanges. If illegal transactions are detected on an OTC exchange, sanctions under the Financial Investment Services and Capital Markets Act will be applied, including criminal penalties, penalty surcharge, account freezes, and restrictions on appointing executives.
Meanwhile, in anticipation that security token offerings (STOs) could expand to debt securities, the handling scope of OTC exchanges will also be broadened. Currently, OTC exchanges can handle unlisted stocks and non-monetary trust revenue securities. Financial authorities plan to expand licensing units to include debt securities going forward.
◇ Introducing the issuer account management institution system… 4 billion won capital requirement
An "issuer account management institution" system will also be introduced, allowing issuers to directly manage investors' securities accounts. Previously, financial companies such as securities firms and banks served as account management institutions, but for security token offerings (STOs), qualified issuers will be allowed to manage accounts directly.
A company that wants to register as an issuer account management institution must meet a capital requirement of 4 billion won and have one account management specialist, one internal control specialist, and two IT specialists.
As an exception, a business operator licensed for non-monetary trust revenue securities brokerage—a small license for fractional investment issuance—may serve as an issuer account management institution without separate registration.