The U.S. Securities and Exchange Commission has accepted a proposal from the New York Stock Exchange to introduce a new trading framework for tokenized securities, according to an SEC filing (34-105260) dated April 18. If approved and implemented, the framework would allow certain listed securities to be traded and settled on a blockchain under a pilot program run with the Depository Trust Company.
Same securities, new format
Under proposed NYSE Rule 7.50, eligible securities would:
- Keep their existing CUSIP codes
- Preserve all current shareholder rights
- Remain fully interchangeable between traditional and tokenized form
Both digital and conventional versions would receive identical execution priority in the NYSE’s order matching system, meaning trade outcomes would not differ based on whether a position is held or settled on-chain or through traditional channels.
How the tokenized settlement would work
Market participants would be able to opt into blockchain-based settlement by using a tokenization flag on eligible orders. Custodians would manage the related tokenization and settlement processes.
The proposal also calls for:
- Adjustments to order routing to recognize tokenized settlement choices
- Modifications to clearing workflows so tokenized trades integrate with existing systems
- Coordination with the DTC pilot to ensure consistent post-trade handling
The framework is designed to function as an overlay to current infrastructure rather than a separate market.
One of the first blockchain integrations on a U.S. exchange
If authorized, this would be among the first formal uses of blockchain settlement on a U.S. national securities exchange. The structure is intended to:
- Apply distributed ledger technology within existing regulatory oversight
- Maintain the role of central market utilities such as DTC
- Test on-chain capabilities in a controlled, limited environment
The move signals that major exchanges are now actively trialing blockchain infrastructure for regulated securities rather than limiting it to off-exchange experiments.
Limited pilot scope focused on large, liquid names
The initial phase will focus on:
- Components of the Russell 1000 Index
- Exchange-traded funds that track major indices
By concentrating on highly liquid and well-established instruments, the NYSE and DTC aim to reduce operational and liquidity risks as tokenization is introduced.
Potential efficiency gains and cost savings
The core objective is to improve settlement speed and reduce back-office costs. Blockchain-based systems have shown the ability to settle transactions in under 10 minutes, compared with the current T+1 standard where trades finalize the next business day.
A 2023 study by Oliver Wyman estimated that broad adoption of such technology could save the global financial industry about $20 billion per year in post-trade processing. The NYSE framework positions tokenized settlement as a practical step toward capturing a portion of those efficiencies within a regulated exchange setting.
Demand appears to be building. A January 2026 survey found that 64% of asset managers are interested in tokenizing assets, up from 40% in 2025, highlighting growing institutional appetite for on-chain exposure.
What traders and market participants need to do
In the near term, market users will need to:
- Identify which securities are included in the NYSE–DTC pilot once the list is published
- Confirm that their custodians and brokerage firms can support the tokenization flag and related processing
- Assess whether their internal systems can handle parallel traditional and tokenized settlement flows
While participation is optional, firms that want to use on-chain settlement will need to ensure operational readiness before the pilot goes live.
Focus on interoperability, not system replacement
Jon Herrick, NYSE chief product officer, has emphasized that the strategy is centered on interoperability. The exchange aims to:
- Build on existing market and clearing infrastructure
- Avoid a full replacement of systems that already deliver scale and efficiency
- Introduce blockchain elements in a way that is backward compatible with current processes
This approach is intended to limit disruption while still testing a structurally different method for recording and transferring ownership.
Timeline and broader implications
The framework is scheduled to operate within DTC’s broader three-year pilot program, planned to start in the second half of 2026. During this period, on-chain settlement would run alongside conventional processes, allowing regulators, exchanges, and market participants to compare outcomes.
If the pilot proves successful, tokenized settlement could:
- Change how equities and other assets are issued, traded, and held in the U.S.
- Redefine post-trade operations by shortening settlement cycles further
- Provide a reference model for other exchanges exploring similar integrations
The SEC’s acceptance of the proposal marks a transition from theory to testing at scale, moving blockchain-based securities from isolated trials to a live, regulated environment on the country’s primary stock exchange.
Curious how traditional finance merges with blockchain? Explore the future of TradFi and tokenized markets in this in-depth guide.
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