NYSE Proposes Rule Change for Tokenized Securities Trading

The New York Stock Exchange (NYSE) has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to amend its rules, aiming to introduce Rule 7.50. According to Foresight News, this rule would allow eligible member institutions to trade tokenized securities within the framework of the DTC's three-year tokenization pilot program. This move aligns with a similar rule change by Nasdaq, which received SEC approval on March 18. The proposal specifies that the scope of tokenized securities trading will be limited to components of the Russell 1000 Index and ETFs tracking major indices. Tokenized securities must share the same CUSIP and trading codes as traditional securities and grant holders the same rights. This ensures they can be traded alongside traditional securities on the same order book, with unchanged execution priority rules and settlement standards remaining at T+1. The NYSE emphasized that all existing regulatory rules will apply equally to tokenized securities, including short-selling regulations, risk management, and market surveillance mechanisms. The overall framework does not require significant exemptions or a parallel market structure.