Crypto exchange OKX and New York Stock Exchange parent Intercontinental Exchange (ICE) are set to launch tokenized stock trading on Nov. 23, despite objections from 67 companies to having their shares listed and warnings from Nasdaq that trading across disconnected platforms could fragment liquidity.
The venture, known as OKXICE, will operate under the US Securities and Exchange Commission’s temporary Innovation Exemption and offer eligible US customers round-the-clock trading. Under the exemption, venues must give companies a chance to object before listing shares tokenized by an unaffiliated third party. JPMorgan Chase, McDonald’s, SpaceX and Coca-Cola were among the companies that objected.
Tokenized stocks are blockchain-based tokens that represent company shares or track their price. The rights they carry depend on how they are structured. The distributed value of tokenized stocks and ETFs reached $3.88 billion on Nov. 11, up 13.4% over 30 days.
In comments to Cointelegraph, former New York governor and OKXICE co-chair Andrew Cuomo said investors would have “the same rights, protections and ownership that come with the underlying shares.”
OKX expects the venue to list more than 70 assets, including 59 exchange-traded funds (ETFs) and tokenized shares of Coinbase, Circle, BitGo, Robinhood and Strategy. The lineup also includes Strategy’s preferred shares.
Related: Public companies object to OKX-ICE’s tokenized stock plan
Tokenized stock trading raises liquidity concerns
The rollout comes amid concerns that trading the same shares across traditional exchanges and blockchain platforms could split liquidity and make prices less reliable.
In October, a study by the International Monetary Fund found that the tokenized stocks were about 1.5 times as volatile as the same stocks in traditional markets. Decentralized exchanges had the weakest liquidity and their prices strayed further from those in traditional markets than prices on centralized exchanges did.
The IMF also warned that combining trading and settlement on a blockchain could remove safeguards that help markets absorb shocks. As tokenized markets grow, greater use of leverage and closer links between markets could amplify fire sales, liquidity runs and financial contagion.
Nasdaq argued in a January filing that trading tokenized stocks on platforms outside traditional rails could fragment liquidity and make it harder for investors to get the best available price. Regular US stock trading runs from 9:30 a.m. to 4 p.m. Eastern time on weekdays, excluding market holidays, though some brokers offer premarket, after-hours and overnight trading.
Cuomo described the current market structure was “built for another era,” arguing that crypto markets had already shown that trading could run around the clock. “Now we are bringing that standard to equities, without asking investors to settle for synthetic exposure or give up their shareholder rights,” he said.
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