Nasdaq Tokenization Push Could Split Stock Markets, TD Securities Warns

TD Securities warned that the expansion into offshore platforms introduces a distinct venue risk that does not exist in the current single-market structure.

Tokenization news

Nasdaq's drive to tokenize capital markets activity may produce a dual-market structure in which traditional U.S. exchanges operate in parallel with blockchain-based trading venues, creating the conditions for price differences across platforms and a fragmentation of trading activity, according to an analysis by TD Securities.

Reid Noch, vice president of U.S. equity market structure at TD Securities, flagged plans by both Nasdaq and the New York Stock Exchange to introduce

into alternative trading systems, which are venues that match buyers and sellers outside the main exchange infrastructure. Noch said Nasdaq is pursuing three initiatives simultaneously: upgrading post-trade settlement processes, enabling companies to issue tokenized shares directly, and supporting trading on offshore

-based platforms such as Kraken.

The combination of those three tracks could result in one regulatory environment governing traditional U.S. exchange activity and a separate one, offshore and blockchain-based, handling some of the same underlying assets. Tokenized shares in that second environment would be backed by real stocks but would operate outside the U.S. regulatory framework, potentially carrying different attributes compared to traditional shareholdings.