SEC Approves Nasdaq Pilot for Tokenized Stock Trading

• The SEC mentioned the Nasdaq’s proposal got feedback with concerns revolving around market surveillance and diverging prices.
• The sanction is followed by the Nasdaq announcement earlier this month that it had collaborated with crypto exchange Kraken. 

The Securities and Exchange Commission (SEC) from the United States sanctioned the pilot proposal of Nasdaq on March 18. The given proposal backs the trading of tokenized versions of stocks and other securities. 

In the start, Nasdaq filed its proposal in September that looked for allowing trades on high-volume stocks in either a traditional or tokenized form on the same exchange in a pilot with the prominent market infrastructure company, Depository Trust Company. 

The tokenized stocks would trade along with their traditional counterparts on the same order book, at the same price, having the same ticker and recognising number and holding the same rights. 

Tokenisation, where an asset is shown on a blockchain, has witnessed a latest boom as prominent financial companies have tested the technology to compress settlement times and experiment with prolonged trading hours. 

Nasdaq’s Announcement 

As per the SEC’s approval filing, only eligible participants will be allowed to take part in the tokenisation pilot and can pick whether to trade a traditional or tokenized stock. The options for tokenized stock are restricted to securities that trade in the Russell 1000 Index, which traces the 1,000 biggest publicly traded firms in the US by market capitalisation.

The SEC mentioned the Nasdaq’s proposal got feedback with concerns revolving around market surveillance and diverging prices, which it said was later diminished by an amendment laying out more details.  

The sanction is followed by the Nasdaq announcement earlier this month that it had collaborated with crypto exchange Kraken to permit its clients to move securities from its infrastructure to tokenized versions that it can be used on blockchains and to permit public firms to make and issue their own tokenized shares. 

The owner of the Intercontinental Exchange, the New York Stock Exchange, has also set its sights on tokenisation and invested in the crypto exchange OKX in early March to launch tokenized stocks. 

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