Wall Street securities tokenization spreads... NYSE is pushing for a 24-hour blockchain trading platform

Source: BlockMedia Original Title: JP Morgan and Goldman Sachs Follow NYSE… Wall Street’s Broader Move Toward Security Tokenization Original Link: Movements surrounding security tokenization are gaining momentum on Wall Street. Following major financial institutions, the New York Stock Exchange(NYSE) has announced plans to develop a blockchain-based securities trading platform, sparking discussions about changes to traditional capital market trading structures.

The NYSE stated that it is developing a new platform that will enable trading of securities issued in the form of digital tokens on a blockchain. The platform is expected to launch after regulatory approval. Listed companies will be able to issue tokenized securities similar to cryptocurrencies through this platform, and investors will be able to trade them directly.

The trading structure will differ from the existing stock market. The NYSE plans to support 24/7 trading on the platform, adopting a real-time settlement system where transactions are settled immediately upon execution. Currently, the stock market uses a T+1 settlement system, where actual cash and shares are exchanged the day after a trade. This requires securities firms to hold additional capital to mitigate settlement risk.

The NYSE believes that implementing an instant settlement system could alleviate these burdens. The T+1 system was cited as one of the reasons for trading restrictions during the GameStop stock surge in 2021. In contrast, blockchain transactions are settled immediately once recorded on the ledger.

The new platform will also allow for fundraising through stablecoins. Stablecoins are cryptocurrencies pegged to the dollar and are a key payment method in blockchain-based financial transactions.

This initiative is seen as an extension of the broader trend of security tokenization spreading across Wall Street, beyond just the NYSE’s own experiments. Previously, major financial institutions launched blockchain-based money market funds, demonstrating active engagement within traditional finance. Several financial firms have also announced projects to hold and transfer stakes in money market funds in the form of digital tokens.

The tokenization efforts, initially focused on short-term financial products, are expanding into the exchange and stock market sectors. Intercontinental Exchange(ICE), the parent company of the NYSE, announced last year its investment in a cryptocurrency-based prediction market platform, hinting at potential collaboration in tokenization ventures.

Market analysts believe that blockchain technology is increasingly recognized across Wall Street as a means to improve the inefficiencies of existing financial market structures. The widespread adoption of 24-hour trading and instant settlement models in the cryptocurrency market has raised questions about the limitations of traditional stock trading hours and delayed settlement processes.

However, regulatory risks remain a key factor. Some crypto companies have issued tokens that track stock prices and traded them overseas, but issues such as discrepancies with actual stock prices and investor protection concerns have persisted. Consequently, the approval status and regulatory standards of the NYSE’s proposed platform by the Securities and Exchange Commission(SEC) will likely influence its future expansion.

As global financial institutions and the world’s largest stock exchange compete in tokenization, it is increasingly viewed that security tokenization is moving beyond a temporary experiment to become a long-term strategy for Wall Street. The integration of traditional finance with blockchain technology is attracting market attention regarding how it will transform trading methods and capital raising structures in the capital markets.