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The New York Stock Exchange (NYSE) has filed a rule change with the U.S. Securities and Exchange Commission (SEC) to allow tokenized versions of stocks to trade on its market.
The filing brings the NYSE a step closer to launching blockchain-based settlement on its regulated market system.
The New York Stock Exchange is proposing to run a pilot for three years concerning tokenized versions of stocks.
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Tokenized stocks are digital assets built on blockchain technology that represent ownership of a traditional stock. They track the price of real-world shares, often backed 1:1 by a custodian.
Under the NYSE proposal to the SEC market regulator, tokenized stocks would remain equal to traditional shares.
The NYSE adds that tokenized stocks would trade on the same order book and follow the same execution priority rules as regular securities.
The filing states that a tokenized stock must also give holders the same rights to dividend payments and voting as traditional shares.
Importantly, the NYSE proposal does not create a separate crypto-style venue for stock trading.
Instead, eligible members would enter orders through the normal exchange and choose to clear and settle the trade in a tokenized format.
Benefits of tokenized stocks include enabling around the clock trading, instant settlement, and ownership of fractional shares.
The NYSE has said that tokenized stocks would help it move to 24 hour a day, seven day a week trading.
NYSE Parent company Intercontinental Exchange Inc (NYSE: $ICE) is currently trading at $154.75.