The New York Stock Exchange (NYSE) is paving the way for one of the most significant changes in the infrastructure of the U.S. stock market in decades.
The exchange announced plans to support tokenized securities and allow continuous trading, 24/7. It is an attempt to modernize how stocks are traded, settled, and information is absorbed in a global financial system. If successful, this change could modify price discovery, settlement risk, liquidity behavior, and investor psychology in U.S. markets.
What is the NYSE really proposing?
The NYSE's plan focuses on building a blockchain-based platform capable of supporting tokenized versions of traditional securities, including stocks and ETFs.
These tokenized values would represent legally recognized real stocks, backed one-to-one by the underlying asset and regulated by existing securities laws in the U.S.
A tokenized stock would still represent ownership in a public company, with the same economic and governance rights as a conventional stock. The difference lies in how ownership is recorded and how transactions are settled.
Importantly, the NYSE is not replacing the existing market overnight. Tokenized securities are designed to operate alongside traditional stocks, with fungibility between formats over time. So this is a parallel system, not a forced migration.
The current structure of the stock market shows its age.
Despite decades of technological progress, U.S. stock markets still rely on a layered structure created for a pre-digital era. Trading, clearing, settlement, and custody are handled by separate entities, each with its own ledger.
This structure brings several problems. Capital remains tied up during settlement periods. Counterparty risk persists until operations are fully settled. Reconciliations between intermediaries increase costs and operational risk.
Most importantly, markets remain constrained by fixed trading hours, even though information flows globally and continuously. These frictions are not always visible to retail investors. But they influence volatility, liquidity, and market behavior every day.
Tokenization changes everything at the infrastructure level.
Tokenization directly targets these inefficiencies. By representing securities on a shared digital ledger, ownership updates and settlement can occur almost in real time. Trading and settlement no longer need to be separate processes connected afterward.
This reduces settlement risk because delivery and payment can occur atomically. It also improves capital efficiency, as collateral and cash are no longer tied up waiting for transactions to settle.
For institutions, this has implications for their balance sheets. For the market in general, it simplifies the post-trading system, which has become increasingly complex.
The important thing is that tokenization does not change what a stock is. It changes how the system processes ownership of stocks.
A tokenized market created to operate continuously changes that dynamic. Trading does not stop on weekends or overnight. Price discovery becomes continuous instead of being limited by hours.
This has significant implications. Nowadays, when results, geopolitical events, or macroeconomic data occur outside market hours, the price adjustment is delayed and then concentrated in strong movements at the market's opening.
In general, continuous trading allows prices to gradually adjust as information spreads, reducing artificial shock points.