The New York Stock Exchange, which is part of Intercontinental Exchange, said it has entered into a collaboration with Securitize to advance tokenized forms of traditional financial securities.
Under the agreement, Securitize will be the first digital transfer agent eligible to create blockchain-based securities for issuers of corporate stocks and exchange-traded funds that intend to use an upcoming NYSE-affiliated Digital Trading Platform, the parties said.
As a design partner, Securitize will work with the NYSE to develop a digital transfer agent program. The stated aim of the program is to build a system capable of helping to process trades in tokenized securities on a blockchain, moving elements of issuance and post-trade processing toward distributed-ledger technology.
Executives said the collaboration will include work on standards for both digital transfer agents and tokenization agents. Those standards are to cover regulatory, operational and technology requirements intended to support institutional-grade infrastructure.
Commenting on the development, NYSE President Lynn Martin said: "As we explore how tokenization can enhance capital markets, it is critical that new infrastructure is developed in a way that preserves the trust, transparency, and protections investors expect"
The move by the NYSE comes as U.S. exchanges, including the NYSE and rival Nasdaq, increase efforts to convert traditional assets - such as stocks, bonds and funds - into blockchain-based tokens. The article notes that earlier this month the U.S. Securities and Exchange Commission approved a Nasdaq proposal that would allow certain stocks to be traded and settled in tokenized form, according to a regulatory filing.
Summary
The NYSE and Securitize collaboration designates Securitize as the inaugural eligible digital transfer agent for issuers on an NYSE-affiliated Digital Trading Platform, and sets a joint agenda to create regulatory, operational and technology standards aimed at enabling tokenized securities trading and settlement on a blockchain.
Key points
- Securitize will be the first digital transfer agent eligible to create blockchain-based securities for corporate and ETF issuers on an NYSE-affiliated platform.
- The partnership will focus on a digital transfer agent program and on standards for tokenization and digital transfer agents covering regulatory, operational and technology aspects.
- The initiative is part of broader activity among U.S. exchanges, with the SEC recently approving a Nasdaq filing to permit certain stocks to be traded and settled in tokenized form.
Risks and uncertainties
- Regulatory requirements remain central to the effort - the collaboration highlights the need to develop regulatory standards, indicating ongoing regulatory design and implementation work that must be resolved.
- Operational and technology readiness is an explicit focus: developing systems that can process tokenized securities trades on a blockchain introduces operational complexity and technological demands.
- Investor protections and market trust are cited as priorities, implying that preserving transparency and protections for investors will be a determining factor in adoption and implementation.