The U.S. Securities and Exchange Commission (SEC) has formally approved a rule change proposal submitted by the New York Stock Exchange (NYSE) that aims to create a new trading mechanism for “tokenized securities.”
The proposal, outlined in document number 34-105260, is considered a critical step towards integrating traditional finance with blockchain technology.
According to the proposal, the NYSE plans to introduce a new regulation called “Rule 7.50,” allowing eligible securities to be traded in both traditional and blockchain-based “tokenized” forms. This structure will be implemented within the scope of the DTC pilot program under the Depository Trust & Clearing Corporation (DTCC).
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In the new system, tokenized securities will share the same trading code (CUSIP) and ownership structure as traditional shares. This will ensure full fungibility between the two forms. Furthermore, on the matching engine side, tokenized assets will be subject to the same priority rules as traditional shares and will not experience any disadvantage in trading order.
Market participants can choose to have transactions executed on the blockchain via a “tokenization flag” that they can use when placing orders. Technical and operational processes will be handled by authorized custodians.
NYSE’s proposal isn’t limited to the trading side alone. The exchange is also making changes to order queuing, routing, and clearing rules, aiming to seamlessly integrate tokenized securities into its existing market infrastructure.
*This is not investment advice.
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