Wall Street is advancing tokenized equities and 24/7 trading, but institutions are hesitant. Tokenization represents traditional stocks on blockchains, enabling instant settlement and potentially round-the-clock markets.
ICE, owner of the NYSE, and Nasdaq have partnered with crypto exchanges to launch tokenized stocks. Yet institutional traders worry about immediate settlement requiring prefunding, disrupting current T+1 operations that allow netting and daily financing.
"No one really wants to be prefunded," said Reid Noch, TD Securities. Instant settlement could strain balance sheets during peak trading, reducing liquidity.
Retail investors may adopt the model faster, especially international ones seeking access when U.S. markets close. They can open crypto accounts more easily than through traditional brokers.
If retail liquidity migrates to tokenized platforms, institutions may eventually follow. But market fragmentation remains a concern-multiple versions of the same stock across blockchains could confuse ownership and undermine price discovery.
Despite risks, exchanges continue exploring extended hours. Tokenization may modernize infrastructure, but adoption is likely to start with retail, not institutions.
