The Financial Supervisory Commission (FSC) of Taiwan has granted Cathay Securities the country’s first security token offering (STO) license.
Cathay has received regulatory approval for its “Sunshine Green Yield” STO bonds, which have a time to maturity of six years, an initial annual interest of 3.5%, and an initial principal amount of 30 million New Taiwan dollars ($930,000).
This STO will allow enterprise owners to purchase green electricity on the market for environmental, social, and corporate governance initiatives and receive variable interest rate payments of up to 5.8% per year. Trading for the Subshine Green Yield bonds will start on Dec. 12 on Cathay’s in-house STO exchange platform.
Since 2019, the FSC has classified tokenized assets as securities, allowing financial institutions to apply for licensing. However, there are fundraising limits and restrictions on the number of STOs that can be conducted per year. The offerings are available to enterprises and accredited investors, with limitations on the amount of STOs that can be purchased by the latter.
To establish credible STO interest rate pricing, Cathay Securities collaborated with risk-control technology company Numerix and National Chung Hsing University professor Ye Zongying to develop Taiwan’s first STO evaluation model. The firm claims that the model is “95% accurate” in calculating the default probability of small and medium-sized businesses.
Cathay Securities, founded in 2004, is one of the largest financial services firms in Taiwan, serving millions of investors and brokerage clients.
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