[New Year's Address] Lee Myung-ho, President of Korea Securities Depository, "Accelerating Security Token Issuance and Platform Development"

[Asia Economy Reporter Lee Seon-ae] Lee Myung-ho, President of the Korea Securities Depository (KSD), announced that this year they will establish a roadmap to build a platform dedicated to issuing and distributing Security Token Offerings (STOs). STO refers to issuing virtual currencies based on company assets, similar to stocks. It is a plan to establish a new business model and organizational system based on blockchain technology.

In his 2022 New Year's address on the 2nd, President Lee said, "This year, we will lay the foundation for digital financial innovation to secure new growth engines," adding, "Security tokens recorded on distributed ledgers (blockchain) pose a significant practical threat that could shake the core operations of electronic registration agencies, which have only operated centralized single ledgers, but on the other hand, it is also an opportunity."

He continued, "Leading fintech companies are already issuing security tokens in practice," and explained, "We expect fierce challenges from competitors armed with innovative technologies in competitive tasks such as electronic voting, securities lending, and proxy registration services."

He emphasized, "We will prepare a roadmap to build a dedicated issuance and distribution platform for security tokens and proceed with speed, while redesigning new business models and organizational systems based on distributed ledgers."

He also stated, "The KSD's national critical facilities, including the data center and vault, must be gradually relocated by February 2023," and added, "We will focus on the successful relocation of the Ilsan center and strengthening the stability of IT infrastructure."

Plans include improving the data backup system, introducing EMP (Electromagnetic Pulse) shielding functions to protect backup data, and expanding the capacity of core systems to enhance IT infrastructure stability.

President Lee also said, "To support innovative finance in the financial market, we will strengthen electronic registration service capabilities," explaining, "We will expand the depth and breadth of electronic registration services through establishing a system to support fractional trading of domestic stocks, accepting electronic registration of government bonds for individual investors, reorganizing the enterprise-wide securities information management system (SEIBro), and expanding disclosure of securitized securities information."

He added, "We will strengthen and advance risk management for securities settlement and securities financing operations," stating, "By promoting the introduction of Repo CCP, responding to the launch of Alternative Trading Systems (ATS), establishing a real-time risk monitoring system for securities lending brokerage, and improving margin management methods for over-the-counter derivatives trading, we will not only enhance competitiveness in securities settlement and financing but also support market activation and stabilization."

He announced plans to expand and strengthen the core infrastructure of the asset management market (FundNet).

Measures include ▲building a support system for non-marketable asset management instructions ▲building a support system for foreign currency asset management instructions for funds ▲expanding service functions of retirement pension platforms and ISA-Net ▲strengthening external cooperation to expand VentureNet services.

He said, "We will also strengthen the capital market-type innovative startup growth support and corporate support service system," adding, "To provide practical support for innovative startups and companies, we will focus on expanding the K-Camp implementation areas and launching a dedicated webpage, improving security-type crowdfunding operations, and activating voting rights support services for institutional investors."

President Lee also stated, "We will strengthen global business capabilities," emphasizing, "To enhance the competitiveness of global business, we will carefully consider expanding the functions of the Hong Kong office, improving laws and regulations related to foreign currency securities, and ensuring the successful hosting of the 24th ACG General Meeting."

He continued, "We will introduce ESG management to lay the foundation for becoming a sustainable company," adding, "We will make 2022 the first year of practicing ESG management and take the lead in creating sustainable and mutually beneficial value."

Regarding last year's management performance, he said, "The KSD was designated as an important indicator calculation institution under the Financial Transaction Indicator Act and began calculating and disclosing the Korea Overnight Risk-Free Rate (KOFR)," expressing expectations that "this will enhance transparency and efficiency in financial transactions, contribute to protecting financial consumers and stabilizing financial markets, and greatly help improve our company's external credibility."

President Lee also cited the launch of the non-marketable asset investment support platform, the opening of the VentureNet system, and the start of fractional trading support services for overseas stocks as major achievements last year.

This content was produced with the assistance of AI translation services.