Executive brief

Nasdaq proposes a path for tokenized representations of listed securities to settle on blockchain rails while trading continues on the single trusted order book. The aim is pragmatic. Price discovery stays unified. Post trade plumbing becomes faster and simpler. As a result, investors keep familiar protections and market participants gain mobility of assets, clearer entitlements and lower operational friction.

Context and why it matters

For years, tokenization lived in isolated pilots. Liquidity stayed thin and the benefits rarely reached mainstream investors. This proposal takes a different route. It brings token settlement into the core equity stack. Consequently, brokers keep the trading workflow they already use, and investors keep the same rights. Meanwhile, settlement gains a programmable option that can compress timelines and reduce errors.

What Nasdaq is proposing

Orders for listed stocks would enter, match and print as they do today. Market data would continue to aggregate across a single book. Surveillance would apply uniformly. After the trade completes, a participant could choose token settlement with an eligible custodian. In practice, execution remains where spreads and depth already exist, while settlement gains a new rail. Therefore, the change targets cost and latency without disturbing price formation.

What remains unchanged for investors

Investors keep voting rights, dividends and the duty of best execution. Portfolios continue to experience the same economic exposure. Disclosures and audit trails remain familiar. In short, a tokenized share is the same security with a different settlement path. Because of that continuity, clients do not need a new interface or a new rulebook to hold the position.

What changes for brokers and custodians

Brokers route orders exactly as they do today. After a fill, they may instruct token settlement for eligible accounts. The heavier work moves to custody and reconciliation. Firms must record the precise location of control, document how entitlements are credited and resolve exceptions quickly. Over time, as tooling matures, firms can expand access from pilot clients to broader segments. In addition, primes and trust banks will need clear policies for token collateral and margin.

Benefits by stakeholder

Investors
They keep the experience they know. Nevertheless, they benefit when corporate actions arrive faster and transfers require fewer steps.

Brokers and market makers
They preserve established gateways, risk controls and matching logic. Meanwhile, they obtain a flexible settlement instruction that reduces back office friction.

Issuers and fund sponsors
They retain listing standards and disclosure, yet reach more digital native holders. Creation and redemption cycles can tighten, and collateral can move with less manual work.

Governance and control blueprint

Success depends on three guardrails. First, strict equivalence of rights between traditional and tokenized forms. Second, a single source of truth for positions to prevent drift in corporate actions. Third, uniform surveillance across both representations so abuse monitoring never opens a gap. With these guardrails, tokenization behaves as a settlement choice rather than a parallel market.

Risks and mitigations

Fragmentation of standards
Firms could select incompatible token formats. To mitigate, members should use shared flags, well defined conversion workflows and testing calendars that force alignment.

Drift in entitlements
Dividends or splits may process at different times. The remedy is a unified position record and strict reconciliation across both forms, especially around record and payable dates.

Split in financing markets
Token collateral may not be accepted widely at first. Conservative haircuts, transparent control locations and documented custody procedures can build lender confidence.