- NYSE and Securitize want to create a legal framework for issuing and managing tokenized securities.
- The proposed platform would enable 24/7 trading with near-instant settlement and allow the use of stablecoins for transactions.
- The move is part of a larger trend on Wall Street toward tokenization. NYSE has chosen a fully on-chain settlement model, while Nasdaq has chosen a DTCC-based model.
The New York Stock Exchange (NYSE) is reportedly working with the digital asset company Securitize to create a blockchain-based platform for trading tokenized securities.
According to a Wall Street Journal (WSJ) report on Tuesday, Securitize will be the first digital transfer agent for the NYSE, allowing users to trade stocks and exchange-traded funds (ETFs) as blockchain-based tokens. Securitize's broker-dealer arm is also likely to connect to the NYSE's Digital Trading Platform, an alternative trading system for tokenized securities.
NYSE’s parent company, Intercontinental Exchange, Inc. (ICE), was up 0.09% in pre-market trading. On Stocktwits, retail sentiment improved to ‘neutral’ from ‘bearish’, with chatter improving from ‘low’ to ‘normal’ over the past day.
The two companies want to set rules that will let transfer agents legally issue and handle tokenized securities. In traditional markets, transfer agents are very important because they keep track of investors' records, issue and cancel ownership certificates, and make it easier for dividends to be paid. The proposed framework would also apply to the tokenized assets.
The project is part of a larger effort by big banks to move traditional assets onto the blockchain. Some existing tokenized stock offerings outside the U.S. are said to work more like derivatives and don't give shareholders rights. NYSE's platform, on the other hand, aims to support "native" tokenization, where investors retain benefits such as voting rights and dividends.
NYSE Eyes 24/7 Blockchain Trading While Nasdaq Takes A Hybrid Approach
Earlier this year, NYSE sought regulatory approval for the platform, which would allow trading 24 hours a day, seven days a week, with settlement almost immediately. It would also allow investors to use stablecoins pegged to the US dollar to pay for trades.
Earlier this month, Nasdaq entered the tokenization industry. On Monday, it also teamed up with the digital-asset trading company Talos to let hedge funds manage crypto positions on its Calypso platform.
The primary distinction between Nasdaq and NYSE is that Nasdaq uses the Depository Trust & Clearing Corp. to settle tokenized stocks and regular stocks. NYSE, on the other hand, has a separate digital trading venue where tokenized stocks are issued and settled directly on a blockchain without the DTCC.
Read also: Delaware Moves To Regulate Stablecoins With First Major Banking Code Overhaul Since 1981
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