Nasdaq planning a tokenized securities platform

Nasdaq’s potential venture into the security token market has seen the New York-based financial services company engage several blockchain startups, including Symbiont, in its efforts to develop the platform, which is planned to handle both the issuance of security token offerings (STOs) as well as secondary market trading.

Security tokens are tokenized financial securities that can be issued to raise funds in the form of equity or debt and can be traded on exchanges in the secondary market. The key difference between security tokens and today’s cryptocurrencies and digital tokens is that they are compliant with regulations and securities laws.

Nasdaq’s push into the tokenized securities market is a testament to the potential of security token offerings becoming an integral part of the capital markets. Nasdaq’s new platform would compete with the likes of tZERO and TokenTrust.

Nasdaq is not new to the Blockchain

Interestingly, the planned tokenized securities trading platform would not be Nasdaq’s first venture into the world of blockchain. In 2015, for example, the company issued private securities of the distributed ledger technology startup Chain.com on the blockchain.

Nasdaq’s blockchain-powered private share issuance platform Linq enabled Chain.com to digitally represent a record of ownership while reducing settlement time and alleviating the necessity for paper-based share certificates.

"Through this initial application of blockchain technology, we begin a process that could revolutionize the core of capital markets infrastructure systems. The implications for settlement and outdated administrative functions are profound," said Bob Greifeld, Nasdaq’s CEO at the time.

In the same year, Nasdaq also announced the launch of a pilot for a blockchain-powered proxy voting system for companies listed on its Estonian exchange. The blockchain platform allowed shareholders who are not able to attend shareholder meetings to vote electronically.

Earlier this year, Nasdaq’s Head of Blockchain Product Management, Johan Toll, told The Street that the company is working on developing a blockchain-powered solution for mutual fund trading and recording. For the mutual fund industry, the blockchain provides "an opportunity to reduce manual work and reduce the risk of errors," Toll explained.

Nasdaq ran a trial for its mutual fund blockchain solution in Sweden in 2017 in co-operation with SEB. Nasdaq and SEB view the mutual fund market as ripe for digital disruption using the blockchain to alleviate the need for paper-documents and costly intermediaries.