- SEC approved Nasdaq’s tokenized trading pilot for select securities using blockchain settlement.
- Tokenized shares will match traditional shares in price, rights, and trading conditions.
- The pilot focuses on major index stocks and ETFs while maintaining existing market safeguards.
The U.S. Securities and Exchange Commission approved a proposal from Nasdaq on Wednesday to introduce tokenized trading for select securities. The move allows eligible participants to settle trades using blockchain-based tokens instead of traditional systems. The decision aims to integrate blockchain into U.S. equity markets while maintaining existing protections and infrastructure.
Tokenized Trading Framework Explained
Under the approved framework, participants can choose how trades settle. They may use either tokenized securities or standard book-entry systems. Notably, tokenized shares will trade alongside traditional shares on the same order books.
They will carry identical tickers, prices, and investor rights. In addition, they will use the same CUSIP identification numbers. This structure ensures consistency across both formats.
According to the SEC filing, surveillance systems, reporting standards, and settlement timelines will remain unchanged. These measures address earlier concerns raised during the proposal review.
Scope Limited to Major Index Securities
The pilot program focuses on high-volume securities. Specifically, it includes stocks within the Russell 1000 Index. It also covers exchange-traded funds tracking the S&P 500 and Nasdaq-100.
Only “eligible participants” can access the tokenized option. However, they retain the choice between traditional and blockchain-based settlement. This approach introduces flexibility without altering trading conditions.
Meanwhile, tokenized and traditional shares will match in price at all times. This alignment prevents discrepancies between the two formats.
DTC Role And Industry Involvement
The Depository Trust Company will handle clearing and settlement for tokenized trades. It will run the initiative as part of a broader pilot program. Nasdaq first filed the proposal in September. Since then, it has worked with DTC to refine the framework.
Separately, Nasdaq partnered with crypto exchange Kraken to expand tokenized stock distribution. At the same time, Intercontinental Exchange invested in crypto exchange OKX to develop similar products.
According to the SEC, these developments follow growing interest in tokenizing traditional financial assets.
