The US Stock Exchange on Blockchain: 3 Points to Understand the SEC's Major Initiative
An exchange that hardly sleeps anymore, stocks turning into tokens. In just one week, the SEC has laid down two pieces of the same puzzle: extending trading hours and an unprecedented exemption to allow real US stocks to circulate on the blockchain. This can be confusing if you've only caught snippets of the news. Here’s a breakdown of what the American regulator is preparing, in three points, before the topic becomes central again next week.
Key points of this article:
- The SEC has extended the trading hours of US exchanges until 11 PM on weekdays, with adapted market data dissemination.
- An unprecedented exemption now allows qualified platforms to trade US stocks in the form of blockchain tokens, under strict conditions and a regulated framework.
- Wall Street Will Trade Until 11 PM, Five Days a Week
The first initiative, the most visible: US exchanges will extend their trading hours until 11 PM on weekdays starting December 6. This is not just a simple scheduling adjustment.
The market data dissemination system (the SIP, which centralizes and redistributes real-time quotes) must also adapt to this extended rhythm, a transition confirmed by Jamie Selway, director of the SEC's Trading and Markets division. The stated goal goes beyond just hours: the SEC wants to test tokenization as a technical solution to maintain a nearly permanent market, with almost instant settlement instead of the classic T+1 cycle.
- The Innovation Exemption
The second piece of the puzzle, the "innovation exemption": the SEC has granted qualified platforms, dubbed Tokenized Securities Venues (TSV), a five-year exemption from the regulatory status of a "stock exchange".
In practical terms, these platforms will be able to facilitate the trading of listed US stocks in the form of blockchain tokens, continuously and in fractions, with almost immediate settlement. However, the exemption remains tightly regulated: a maximum of 75 large-cap symbols, capped at 0.25% of the average daily volume of the stock, and up to 250 small-cap symbols at 2.5% of volume. Each TSV must also notify the issuer of the security it wishes to tokenize in writing, allowing them 30 days to object.
- A Regulated Innovation, Not a Blank Check
The contentious question remains: is the SEC opening the floodgates, or is it cautiously testing the waters? The answer leans towards the latter option. Five years is significant, but it is not a permanent authorization. Volume caps, the right of veto for issuers, and the requirement for public and auditable smart contracts outline a framework designed to limit excesses rather than to unleash them. The American regulator has actually postponed this issue several times before making a decision.
The thread of the week can be summed up in one sentence: the SEC bets on blockchain to run a financial market that is faster, longer, and more fractional, without handing over the keys to the truck. The topic will soon return to the table as the first TSVs begin to list their initial securities.
-- Price
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