Big Board joins other Wall Street firms in tokenization push
The New York Stock Exchange said Monday that it was developing a platform for trading tokenized securities, putting the heft of the 233-year-old exchange behind Wall Street’s growing embrace of the technology behind bitcoin.
The details
The NYSE said it would seek regulatory approval for the new platform, which companies could use to issue securities that are represented as digital tokens on a blockchain, similar to the way cryptocurrencies work. It didn’t specify the timing of the launch, which depends on when regulators give it the green light.Like crypto exchanges, the new platform would offer 24/7 trading, the NYSE said. That is different from the NYSE itself, which is only open five days a week and shuts down overnight.
The NYSE said its new platform would settle trades instantly—another feature that sets it apart from traditional financial-industry practices. Currently, when investors buy or sell a stock, the cash and shares don’t change hands behind the scenes until the next business day.
That process—called “T+1 settlement”—forces brokers to hold extra capital to protect against the risk that the other side of the trade might default. The length of the settlement process has been linked to snafus such as Robinhood Markets’ decision to halt trading in GameStop shares in January 2021. In contrast, transactions on blockchains are settled immediately.
Users of the new platform would be able to use stablecoins to fund trades, the NYSE said. Stablecoins are a popular type of cryptocurrencies whose value is pegged to the dollar.
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