The U.S. Securities and Exchange Commission has approved a
proposal from Nasdaq to test trading in tokenized versions of equities and
other securities. This follows Nasdaq’s
earlier statements that tokenized shares could enable faster settlement,
potentially moving toward “instant or atomic settlement,” though infrastructure
remains a constraint.
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The exchange submitted the plan in September. It proposed a
pilot that would allow certain widely traded stocks to be bought and sold
either in their conventional form or as blockchain-based tokens on the same
platform. The initiative will involve the Depository Trust Company, which
provides core post-trade infrastructure in U.S. markets.
Tokenized Shares Mirror Traditional Stock Rights
Under the structure outlined in the filing, tokenized shares
will not be treated as separate instruments. They will be listed under the same
ticker, match the same price, and trade within the same order book as standard
shares. Investors will also retain identical rights regardless of the format.
Tokenization refers to the process of representing financial
assets on distributed ledger systems. Large financial institutions have
recently increased testing in this area, focusing on reducing settlement times
and enabling trading beyond standard market hours.
The SEC said participation in the pilot will be restricted.
Only “eligible participants” will be allowed to access tokenized trading. These
participants can choose between traditional and tokenized formats when
executing trades.
Nasdaq receives SEC nod for trading in tokenized securities https://t.co/IM3avyH0J0
— Reuters Legal (@ReutersLegal) March 19, 2026
SEC Addresses Tokenization Surveillance Concerns
The pilot will include large-cap U.S. equities and major
index-linked funds. Eligible securities cover stocks in the Russell 1000 Index,
as well as ETFs linked to the S&P 500 and Nasdaq-100.
During the SEC review, some comments raised concerns about
how the model would handle market surveillance and whether tokenized and
traditional shares could trade at different prices. The regulator said these
issues were addressed through a revised submission that provided additional
operational details.
The approval follows Nasdaq’s broader tokenization
initiatives. Earlier in March, the exchange said it would work with Kraken to
allow securities to be converted into tokenized formats for blockchain use. The
program also includes a framework for companies to create and issue their own
tokenized shares.
Other market operators are pursuing similar moves.
Intercontinental Exchange recently invested in OKX to develop tokenized equity
products.
This article was written by Tareq Sikder at www.financemagnates.com.
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