The New York Stock Exchange will develop a security token platform
- Future of Finance
- Jan 18
- 2 min read
Updated: 3 days ago
Security tokens and fund tokens will be traded 24/7
Security tokens and fund tokens will settle using Stablecoins
Tokenised cash and collateral are key to the NYSE strategy
The New York Stock Exchange (NYSE) says it is going to develop a regulated platform for on-chain trading and settlement of security tokens.
It is planning to build a separate infrastructure that will operate 24/7 and settle trades in security tokens instantly using Stablecoins.
The new platform will host native security tokens but also tokenised versions of existing equities that will be fungible with their traditional equivalents, including in respect of voting rights and entitlements such as dividend payments. One advantage of the security token alternative will be the option to trade fractionalised shares.
The new security token platform will be open to all qualified broker-dealers.
ICE, which was founded as recently as 2000, was a pioneer of digital trading in the energy and commodity markets, so sees tokenisation of public securities as consistent with its historic personality.
"Since its founding, ICE has propelled markets from analogue to digital,” says Michael Blaugrund, Vice President of Strategic Initiatives, ICE. “Supporting tokenised securities is a pivotal step in ICE's strategy to operate on-chain market infrastructure for trading, settlement, custody, and capital formation in the new era of global finance.”
Technically, NYSE says the new platform will rely on centralised order matching (via the Pillar matching engine of its conventional exchange) but rely on blockchain technology for post-trade services such as settlement and custody.
“For more than two centuries, the NYSE has transformed the way markets operate,” says Lynn Martin, President of the NYSE Group, which is owned by Intercontinental Exchange, Inc. “We are leading the industry toward fully on-chain solutions, grounded in the unmatched protections and high regulatory standards that position us to marry trust with state-of-the-art technology. Harnessing our expertise to reinvent market infrastructure is how we’ll meet and shape the demands of a digital future.”
The new platform is being launched at a time when American exchanges are coming under pressure to extend trading hours.
See the Future of Finance webinar on the extension of trading hours, which is aimed at investors in Asia in particular: https://www.futureoffinance.biz/waking-up-to-an-equity-market-that-will-never-sleep
Indeed, NYSE describes the new token platform as “one component of ICE’s broader digital strategy, which includes preparing its clearing infrastructure to support 24/7 trading and the potential integration of tokenised collateral.”
The reference to collateral is intriguing, since tokenising conventional assets for use as collateral is seen as a major axis of growth for tokenised markets.
ICE is already working with Bank of New York and Citi to enable tokenised deposits to be used to meet cash margin calls from central counterparty clearing houses (CCPs).
ICE has a powerful stake in tokenised collateral (or margin) payments, because it owns six CCPs around the world, including ICE Clear Europe for energy contracts and ICE Clear Credit for credit default swaps.