NYSE Teams Up with Securitize as TradFi Bets on Tokenization

Wall Street is trading in its fax machine for blockchain. 

The New York Stock Exchange (NYSE) is teaming up with digital asset company Securitize to develop a tokenized securities trading platform. The partnership follows NYSE parent company Intercontinental Exchange’s January announcement that it was seeking regulatory approval for such a platform, which would enable 24/7 operations, instant settlement and stablecoin-based funding. 

Securitize will be the exchange’s first digital transfer agent, creating blockchain-based versions of stocks and exchange-traded funds (ETFs), according to a statement. 

T+1 to T+0 

While many aspects of tokenized trading would shake up what investors have come to expect from the traditional financial system, instant settlements are particularly noteworthy. The extra time before shares officially move from the seller’s pockets to the buyer’s introduces clearance and settlement risk and slows payment. You may remember the settlement process from 2021, when Robinhood CEO Vlad Tenev placed some of the blame for his platform’s suspension of GameStop trading on the then-two-day settlement period. 

In 2024, the securities market transitioned from T+2 (when transactions settled two days after a trade) to T+1 (just one day). NYSE’s new platform could usher in T+0. (While the press release doesn’t explicitly say this, it does say that with Securitize, the exchange is developing a “digital transfer agent program intended to support on-chain settlement of tokenized security transactions.”)

“Instant settlement highlights one of the most important attributes of tokenization,” Rich Lee, head of program trading and execution strategy at Baird, told The Daily Upside. “This aligns with the progression in the equity marketplace to shortened settlement times, from T+2 to T+1, as we progress along the roadmap to a T+0 world for equities.”  

NYSE isn’t the only market giant looking to reap the benefits of tokenized trading: 

• Last week, the Securities and Exchange Commission approved Nasdaq’s proposal for some stocks to trade and settle in tokenized form. 
• Some platforms, including Robinhood and Kraken, offer tokenized stocks, but not to US users. 

Waiting on Adoption: Meaningful shifts in the financial system only happen if there’s liquidity, interest from participants on both sides of trades and trust from institutions. While crypto and tokenization have gotten a lot of airtime, “the test will be if investors are ready to embrace these new platforms in enough scale to create a meaningful marketplace,” Lee said.