Nasdaq, the world's second-largest stock exchange, has filed a request with the U.S. Securities and Exchange Commission to allow trading of tokenized stocks using blockchain technology.
Definition of Tokenized Stocks
The exchange has sought amendments to existing rules, including the definition of a 'security,' so that tokenized shares could follow the same trading and reporting system as regular stocks. Nasdaq's filing stated that 'a security may be traded in the Nasdaq Market Center in either traditional form or tokenized form (a digital representation of ownership and rights which utilizes blockchain technology).'
Importance of Tokenization for the Market
Nasdaq emphasized that tokenized assets should be clearly labeled so that the firms responsible for clearing and settlement can process them correctly. The exchange noted that tokenized stocks would receive the same treatment and trading priority as traditional shares if they confer the same rights to investors, including voting rights.
Global Competition and the Future of Tokenized Stocks
Nasdaq also pointed out the emergence of European platforms that offer U.S. tokenized stocks but do not provide actual ownership of company shares for investors. These platforms only sell digital rights to shares they hold themselves, and these rights do not include all investor privileges. Nasdaq believes that trading of tokenized securities must occur within the framework of an interconnected national market system and not on isolated trading venues.
Nasdaq's proposal for trading tokenized stocks may have far-reaching implications for the financial market, especially if approved. It could improve investor access to new forms of trading and create a more competitive environment in the market.
