The US Securities and Exchange Commission has approved Nasdaq’s pilot to support trading tokenized versions of stocks and other securities.
Nasdaq first filed the proposal in September to permit high-volume stocks to trade in either traditional or tokenized form on the same exchange, in coordination with the Depository Trust Company. Under the pilot, tokenized shares would trade on the same order book as their traditional counterparts, at the same price, with the same ticker and identifying number, and would carry the same shareholder rights.
Tokenization—representing assets on a blockchain—has gained traction as financial firms test the technology to shorten settlement times and enable longer trading hours.
The SEC’s approval limits participation to “eligible participants,” who may choose whether to trade the traditional or tokenized version of a security. Eligible tokenized securities are restricted to stocks in the Russell 1000 Index and exchange-traded funds that track the S&P 500 and Nasdaq-100 indices.
The SEC noted that initial comments raised concerns about market surveillance and the potential for divergent prices; Nasdaq amended its proposal to address those issues with additional detail.
This approval follows Nasdaq’s announcement that it would work with crypto exchange Kraken to let clients move securities into tokenized forms usable on blockchains and to allow companies to issue tokenized shares. The New York Stock Exchange owner, Intercontinental Exchange, has also pursued tokenization initiatives, including an investment in crypto exchange OKX to support tokenized stocks.
SEC Chair Paul Atkins said the agency will soon seek public comment on several crypto-related exemptions, including a proposed “fundraising exemption” to let some crypto-linked securities raise a capped amount within 12 months without full registration.
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