The first major US test of tokenised shares has stalled on company objections, not the technology. The question isn’t whether shares can be tokenised, but whether the company gets a say in how and where its shares trade.
In October, OKXICE, a joint venture between crypto exchange OKX and Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, told the US Securities and Exchange Commission (SEC) it plans to trade tokenised versions of more than 60 US-listed stocks, 24 hours a day, seven days a week. By early November, nearly 80% of those companies have formally objected, including Apple, Microsoft, Nvidia and Amazon. It’s a development I’ve been watching closely, because the question it raises goes well beyond the US.
How the US framework works
In September, the SEC introduced its Innovation Exemption, a five-year framework that allows certain venues to trade tokenised US-listed shares onchain. Tokens must give holders the same rights as the underlying shares, including dividends, voting and a share of assets on liquidation, and they can be created by the company itself or by an unaffiliated third party.
That distinction matters. A company can tokenise its own shares directly. The objection process only applies when someone else does it for them: the venue must notify the company, which then has 30 calendar days to object. Object, and the tokens stay off that venue. Stay silent, and trading can begin.
Where the shareholder relationship sits
Under OKXICE’s model, the company’s shares are bought and held by a third party, the ‘tokeniser’, through a registered broker-dealer. The token is not the share. It is a claim on a share sitting in the tokeniser’s account, one token for one share, recorded on a public blockchain. The token holder has the economic and voting rights of a shareholder, but they are passed through the tokeniser, rather than the token holder appearing on the company’s register. Dividends, proxy materials and corporate actions all flow the same way. And because prices are set inside each trading pool rather than by the market for the underlying shares, the two can move apart, particularly outside normal trading hours.
The SEC’s own order points to two of the issues at stake: keeping the shareholder register accurate when tokens change hands, and the risk of pool prices drifting away from the price of the underlying stock. Commentary from US securities lawyers has gone further, setting out what a company should weigh before its window closes: who actually holds the shares and whose name is on the register, how voting rights are passed through, whether the company can identify or communicate with token holders, how corporate actions and record dates are handled while the primary market is closed, and how around-the-clock trading sits with disclosure practices built around exchange hours. And once the 30-day window closes, the company can’t later object to trading on that venue.
An objection doesn’t necessarily mean a company is against tokenisation. The notice gives no reasons, and OKXICE’s co-chair has described the objections as a natural wait-and-see response. Some objected before their shares were even on the list. What the objections do demonstrate is that companies want a say in how and where their shares trade.
What is different this time
Markets have worked through this before. American Depositary Receipts (ADRs), which let US investors trade shares in non-US companies, come in two forms. Sponsored ADRs are set up with the company, through an agreement with a depositary bank. Unsponsored ADRs are created without it, though the depositary typically asks the company for a letter of non-objection first.
Once a third-party token is trading, the company has no say in how it trades. Round-the-clock trading means news released after the market closes may be priced onchain before the primary market reopens, making disclosure harder to manage. And because these venues aren’t registered exchanges, they sit outside some of the rules on price dissemination and orderly markets that apply to the listed market.
The difference comes down to the default.
In the US, a company has to act to opt out. At FCX, companies opt in because we solve for liquidity on their terms.
When the company leads, questions like the register, corporate actions and pricing are worked out with the company, rather than around it.
A question private markets have already answered
It’s often assumed that new market technology will start with the biggest listed stocks. The OKXICE experience suggests otherwise. In private markets, the company is already part of every decision about who holds its shares. Constitutions, shareholder agreements and pre-emptive rights mean a transfer usually needs the company’s approval before it happens, and a change of ownership generally isn’t effective until it’s on the register. Building a market around a private company’s shares without the company is difficult. So the question the OKXICE objections raise, whether a company gets a say in how and where its shares trade, is already settled here. That may make private markets the natural place for tokenisation to find its footing. A company-led model isn’t a constraint on private market liquidity. It’s how private market liquidity works, and it’s the model FCX is built on.
How FCX works
Companies and funds choose to come to market on FCX and stay in control of how their securities trade. In a tender, for example, the company sets the pricing, allocations and timing.
Tokenisation on FCX means something different. Each holding is recorded as a digital token on a permissioned ledger operated by FCX under its market and settlement licences. The token is the register entry, not a claim on a share held somewhere else. Ownership sits on the company’s register, so the company always knows who its shareholders are. There is no public blockchain and no cryptocurrency involved.
That control sits alongside the protections of a licensed market and clearing and settlement facility, where securities, including real-world assets, are traded under Australian regulation. And because the register and the market are one system, there is no second instrument trading alongside the company’s shares, and no second price for the company to reconcile. With the companies and funds on FCX not available on public markets, FCX is likely to be the only venue where these assets can be traded, certainly in Australia.
OKXICE could begin operating from 3 November, though it hasn’t announced a launch date and objections can keep arriving as each company’s 30-day window closes. The tokens aren’t exclusive to OKXICE, so other venues may follow. The SEC has also invited public comment, and its Chairman has said the exemption must be followed by lasting rules.
From where I sit, technology will keep moving. But the first real test has already answered the bigger question. Companies want a say in how and where their shares trade.
David Ferrall
Founder, CEO and Managing Director of FinClear Group
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