Providing a Stable and Fair Marketplace Exchange

The sustainable growth of capitalist society requires the establishment of a stock marketplace that allows for stable and fair marketplace exchange transactions. However, Japan's stock exchanges have yet to fully develop such a platform.
For example, in the U.S. public exchanges such as the NYSE and NASDAQ account for only just over 50% of the total stock trading volume, and transaction costs are trending downward due to market competition from proprietary trading system (PTS) operators. Meanwhile, in Japan, there are only three PTS operators (Japannext, Cboe Japan and Osaka Digital Exchange), and combined they account for only some 10% of trading volume. By comparison, the Tokyo Stock Exchange (TSE) accounts for approx. 90% of trading volume.
A cited reason a PTS has yet to penetrate Japan is due to agency rules for trade orders. Each brokerage firm, following the rules stipulated in Japan's Financial Instruments and Exchange Act, is required to execute customer orders in the market with the best conditions, considering price, cost and speed, among other factors. However, these criteria are left to the discretion of each brokerage company, and many believe that the TSE, with its large trading volume, is the best choice for execution. As a result, PTS alternatives are not currently actively utilized. In other words, in Japan, even if a PTS presents the best price (indicative quote), generally the transaction will be executed on the TSE unless the investor provides instructions to do otherwise. In the U.S., however, orders are sent to all markets including PTSs, and executing an order using another exchange while ignoring the best indicative quote is prohibited.
The SBI Group believes that this best execution policy needs to be revised in order to provide more fair opportunities to investors in Japan's transaction market. In addition, by developing the PTS as an alternative exchange in Japan and developing an environment for competition with commercial exchanges such as the TSE, the SBI Group believes that it will be possible to provide truly customer-centered services in compliance with fiduciary duty to the investment community. This is a manifestation of the SBI Group's basic philosophy under its "Customer-centric Principle."

ODX, which was established through joint investment from the SBI Group and SMBC Group with capital contribution from Nomura Holdings and the Daiwa Securities Group, commenced operations in June 2022 as a PTS handling equity transactions. And then, after 2023, plans to begin handling security tokens (ST), the next generation of financial products.
ODX was established to play a role as the first ST exchange in Japan. To develop the market for STs, both a primary market for token issuance and a secondary market for token trading are necessary. ODX will provide these functions, which will increase financing options for companies and invigorate Japan's capital markets.

Osaka Digital Exchange