Introduction to NYSE’s Tokenized Securities Platform
The New York Stock Exchange (NYSE) is developing a platform for trading and on-chain settlement of tokenized securities, with plans to seek regulatory approvals for a new venue based on this infrastructure. According to its owner, Intercontinental Exchange (ICE), the system is designed to support 24/7 operations, instant settlement, dollar amount orders, and stablecoin-based funding. The platform combines the NYSE’s pillar matching engine with blockchain-based post-trade systems that can support multiple chains for settlement and custody.
ICE did not specify which blockchains would be used, and the company noted that the venue and its amenities are subject to regulatory approvals. The scope described by ICE includes U.S.-listed stocks and ETFs, including fractional share trading. Tokenized stocks could be interchangeable with traditionally issued securities or issued natively as digital securities. Tokenized shareholders would retain traditional dividends and governance rights, and the distribution is intended to provide “non-discriminatory access” for qualified broker-dealers.
Impact on Market Structure
The forward-looking impact on market structure lies less in the token shell and more in the decision to combine continuous trading with instant settlement. With this design, the binding restriction shifts from matching orders during a session to moving money and collateral across time zones and outside bank hours. U.S. markets recently completed the transition from T+2 to T+1 settlement, effective May 28, 2024, a project that the SEC tied to updated rules for clearing agencies and broker-dealers.
Pressure for longer trading windows is also growing in publicly traded stocks, with Nasdaq announcing it is seeking SEC approval for a 23-hour, five-day trading schedule. ICE’s proposal expands the concept by combining always-on trading with a settlement strategy it calls “instant.” This approach would require market participants to position cash, lines of credit, or eligible on-chain funding in advance at any time.
Tokenized Assets and Collateral Mobility
For crypto markets, the bridge is the settlement assets and collateral workflow. ICE specifically referred to stablecoin-based financing for orders and separately to tokenized bank deposits for clearinghouse fund movements. A base case scenario is a settlement asset race in which stablecoins and bank-issued tokenized deposits compete for acceptance in brokerage and clearing operations.
A second scenario is collateral mobility spillover, where tokenized collateral becomes a primary tool for intraday and overnight margining in a 24/7 environment. This shift could increase demand for tokenized cash equivalents such as treasury tokens, which can be moved in real time within defined eligibility rules. ICE is working with banks such as BNY and Citi to support tokenized deposits through ICE’s clearinghouses.
Macroeconomics and Regulation
Macroeconomic conditions set the incentive gradient for these fundamental changes, as collateral efficiency becomes more important as interest rate policy and balance sheet costs change. The OECD’s baseline scenario assumes that the federal funds rate will remain unchanged until 2025 and then be reduced to 3.25-3.5% by the end of 2026. In this way, carry costs can be reduced while institutions can focus on liquidity buffers and margin funding as trading windows become longer.
For more information on one of the most important collateral-like building blocks, check out CryptoSlate’s in-depth look at tokenized treasuries. The NYSE said it would seek regulatory approvals for the platform and proposed venue. ICE did not provide a timeline, did not specify suitable stablecoins, and did not specify which chains would be used.
Read more about this topic at https://cryptoslate.com/wall-streets-secret-blockchain-platform-is-coming-for-your-dividends-and-its-using-stablecoins-to-do-it/
