Nasdaq has submitted a filing to the US Securities and Exchange Commission (SEC) to support the trading of tokenised securities on its markets. The exchange operator is seeking approval for member firms and investors to tokenise equity securities and exchange traded products (ETPs) that are traded on the Nasdaq Stock Market.
Chuck Mack, Nasdaq’s senior vice president of North American markets says, “Our goal is to integrate digital assets into Nasdaq’s current infrastructure and systems.”
The filing proposes a simplified approach to the trading of tokenised securities under existing regulatory frameworks. A security may be traded on Nasdaq in either tokenised or traditional form. Once the order has been entered, the participant may similarly select to clear and settle in either tokenised or traditional form. Nasdaq will communicate the participant’s instructions to the Depository Trust Corporation (DTC). All shares will be traded with the same order entry and execution rules, with the same identification number (CUSIP), and give their holders the same rights and benefits as traditional shares.
Don’t fix what’s not broken
Mack added that fundamentally, the proposal is about integrating tokenised security trading into the current infrastructure of US markets – a system that market participants already know and trust. “This trading would still take place under the SEC’s existing federal regulations ensuring fair and orderly trading,” he emphasises.
“The US has existing rules that don’t preclude different types of representation of a security. If you’re trading a stock and we’re having DTC tokenise it after the trade, then nothing is different from the perspective of how the market functions, how you trade, how you get your best execution, or how you buy or sell on your trading platform. Importantly, both the traditional and tokenised types of shares would have the same value, the same rights and benefits, and the same market identification number.”
Keeping tokenised securities under existing systems has several advantages; it ensures price discovery, disclosure, and best execution. Additionally, it can also prevent a fractured market with different versions of the same assets across multiple blockchains, all offering tokenised securities trading but not working well together.
