Nasdaq has submitted a request to the SEC to authorize the trading of tokenized stocks on its platform, aiming to integrate these instruments with traditional securities under a unified operational framework. The initiative seeks to modernize post-trade processes, expand market access through blockchain technology, and facilitate the inclusion of new participants, although it faces regulatory scrutiny and opposition from traditional financial institutions.
What Nasdaq Proposes
The request aims to allow listing and trading of tokens representing shares, retaining the value and economic rights of the underlying stocks, and establishes rules on rights, settlement, and oversight. The proposed infrastructure would record and settle transactions leveraging distributed ledgers to accelerate processes that currently take several days, under a framework designed to provide regulatory clarity, protect shareholder rights, and standardize global markets.
How It Works Technically
The model combines elements of conventional markets with tokenized records, where custody of underlying securities remains structured and the token acts as a transferable digital representation on-chain. This allows:
-
Near real-time settlement
-
Reduction of counterparty risk
-
Enhanced traceability
Additionally, it maintains interoperability with existing systems to avoid operational disruptions, while blockchain technology provides resilience and immutable transaction records.
Expected Benefits
The initiative highlights several advantages:
-
Operational speed: reduced settlement times and automated processes
-
Cost reduction: fewer intermediaries and simplified operations
-
Greater access: potential for fractional ownership and participation by retail investors
-
Transparency: native auditability and traceability in the distributed ledger
-
Technological innovation: ability to develop hybrid financial products combining traditional and digital instruments
Market Reactions, Regulatory Stance, and Risks
The initiative has been covered by financial media such as Reuters and Bloomberg and has received support from the crypto sector, while traditional groups call for caution and uniform regulatory treatment. Key challenges include:
-
Legal certainty over shareholder rights in tokenized environments
-
Custody security
-
Market liquidity
-
Cross-border supervision
The proposal will require regulatory guarantees to avoid legal gaps that could harm retail investors, as well as contingency protocols for technological failures or extreme market events.
Conclusion
The Nasdaq petition to the SEC represents a potential turning point in the convergence of traditional and digital markets. If approved, it could enable a more efficient, inclusive, and accessible financial infrastructure, provided the rollout is accompanied by regulatory safeguards, investor education, and proper oversight.
