NYSE picks Avalanche to settle tokenized stock trades

The New York Stock Exchange said on Monday, November 9, that its planned tokenized securities platform will use the Avalanche ↘ 2.23% blockchain to settle trades. The choice puts a public blockchain at the center of Wall Street's effort to trade stocks around the clock. According to The Wall Street Journal News Corp ↗ 0.40%, which first reported the news, the platform is targeting a fourth-quarter launch, pending regulatory clearance. It will match trades using the NYSE's existing technology and use Avalanche to settle them immediately.wsj.com

How the platform will work

In its pre-market update, the exchange said the upcoming NYSE-affiliated alternative trading system will use Avalanche to bring the clearing of tokenized equities onchain "at institutional scale." CoinDesk reported that Avalanche will supply ledger technology to the clearing firm behind the venue, which plans to offer trading and settlement around the clock if regulators approve.prnewswire.com+1

Avalanche will not be the only blockchain involved. The venue is built to handle stocks issued on several networks, with Avalanche recording and settling the trades, CoinDesk reported. The setup combines the NYSE's Pillar trading engine with blockchain-based clearing, settlement and custody, and it is meant to support 24/7 trading, instant settlement and funding with stablecoins.coindesk.com

"At the NYSE, we're looking at how blockchain technology can expand what we offer in equities, and we're picking the right technology for each job," Dennis Lee, the exchange's head of digital issuance, said in a statement quoted by CoinDesk. He said the exchange needed a ledger that could process transactions quickly, keep costs predictable and control who is allowed to participate. The AVAX token rose after the announcement.coindesk.com

A year of testing

The decision follows about a year of hands-on testing of Avalanche by the NYSE and its parent, Intercontinental Exchange ↗ 2.40%. That testing covered how the network performs and how well it connects to Pillar, Crypto Briefing reported. U.S. stock trades currently settle one business day after execution.cryptobriefing.com

Wall Street's tokenization race

Last week the exchange expanded its transfer agent network to six firms. Broadridge ↘ 0.06%, Computershare ↗ 0.13%, Equiniti and Superstate joined existing partners Securitize and tZERO, according to CoinDesk. Competitors are building their own systems as well. Nasdaq ↘ 0.31% is developing tokenized stock infrastructure, and last month the Depository Trust & Clearing Corporation launched a tokenization service focused on custody and transfers.coindesk.com

Regulators still have the final say. Every major part of the NYSE venue, including round-the-clock trading and onchain settlement, depends on approval, as The Wall Street Journal noted.wsj.com