Security Token Research Consortium Established By Japanese Bank MUFG

Blockchain, Group, News | November 11, 2019 By:

Japan-based Mitsubishi UFJ Financial Group (MUFG), the world’s fifth-largest financial institution, has established the Security Token Research Consortium to develop next-generation financial transaction services using blockchain technology.

The ST Research Consortium includes Mitsubishi UFJ Trust and Banking Corporation, together with Mitsubishi UFJ Morgan Stanley Securities Co., MUFG Bank, and 21 other unnamed partner companies. The goal of the consortium is to offer an infrastructure that enables seamless automatic securities settlement and fund settlement, as well as the protection of investors’ rights, based on blockchain technology. According to MUFG, the Trust Bank has also applied for a patent in Japan for technology supporting the service.

The service, called Progmat, will reportedly combine security token and smart contract technology to make it possible to do fundraising and management on one platform, managing a variety of financial products (such as bonds and securitised products) anytime, anywhere and with anyone.

“Specifically, by putting the ledger information of rightsholders who have existing bonds and/or trust beneficiary securities related to underlying assets on blockchain, each time rights are transferred the information will be automatically updated, with the rights legally claimable,” said MUFG. “Information about each security will be programmed at the time of issue and fund transfers associated with interest payments and redemption will be implemented automatically. Through the exchange of tokens on different blockchains without third party mediation, the service aims to settle funds automatically and simultaneously upon the transfer of rights to securities.”

The consortium is expected to share knowledge and conduct research from the perspectives of funding/investment, arrangement/intermediation, and technical cooperation/settlement studies, with the aim of rapidly introducing the blockchain-based service.