Cathay Securities has gained approval from Taiwan’s Financial Supervisory Commission (FSC) to operate Security Token Offering (STO) services, making it the first securities firm in Taiwan to do so.
The inaugural STO, led by Grinnodot, the parent company of Sunnyfounder, introduces the loosely translated “Sunshine Green Benefit Debt STO.”
This initiative features a six-year debt structure, a 3.5% annual interest rate, and a fundraising goal of NTD 30 million.
Chen Chun-yi, Deputy Manager of Cathay Securities’ Digital Assets Department, notes that to attract corporate participation, subscribers to this STO can benefit from favourable market conditions, potentially increasing the annual interest rate to 5.8%.
The fundraising campaign is open until December 8, with the official issuance scheduled for December 12 on Cathay Securities’ proprietary STO trading platform.
Chairman Zhuang Shun-yu explains that the FSC’s 2019 regulations define STOs as tradable securities, allowing platforms to apply for self-operating licenses.
This enables businesses to issue security-based virtual currencies to professional investors.
The fundraising limit for one STO is NTD 30 million every six months, in line with Taiwan Stock Exchange guidelines.
Zhuang Shun-yu highlights the global trend of STOs, regulated in over 10 major markets, including Taiwan, the United States, Singapore, Hong Kong, and the United Kingdom.
Unlike traditional Initial Public Offerings (IPOs), Security Token Offerings represent digitally stored, exchangeable, and transferable value.
They involve investment attributes like capital contribution, collaboration in ventures, profit expectations, and reliance on issuer or third-party efforts.
Cathay Securities collaborates with Cathay Financial Holdings’ Digital Development Center Blockchain Team to establish an STO trading platform.
Covering issuance, negotiation, declaration, settlement, internal control, and risk management, this platform provides an alternative fundraising channel for businesses beyond conventional listings.
To set credible STO interest rates, Cathay Securities collaborates with risk management tech giant Numerix and Professor Yeh Tsung-ying from Chung Hsing University.
Together, they’ve developed Taiwan’s first STO valuation model, boasting a remarkable accuracy of 95% in calculating default probabilities for small and medium enterprises.
Senior Vice President Yao Hsu-chieh from Cathay Financial Holdings sees Cathay Securities’ STO approval as the group’s first step into digital assets.
Emphasising innovation and business growth, Cathay recognizes the need for a well-regulated STO trading platform, ensuring investor security within financial regulations.
Cathay Securities aims for a user-friendly, efficient, and operationally seamless digital investment platform.
By October’s end, their customer base had surpassed one million.