SEC Suspends Trading of Tokenized Stocks After Volume Breaches
Buying tokenized stocks may seem straightforward, but there's a catch - trading can be suspended for three months if the exchange breaches volume limits. This rule is part of the SEC's framework for experimental Tokenized Securities Venues (TSVs), which aims to test automated market makers and permissioned access.
The SEC allows five-year testing of trading through automated market makers, where software matches orders against a pool of assets supplied by other participants. However, this experiment comes with limits on the number of stocks an exchange can offer and how much it can trade in each.
Qualifying tokenized stocks must preserve economic and governance rights similar to traditional shares, including dividends and voting. Synthetic exposure tokens, which give a financial return linked to a stock without ownership, don't qualify. If trading volume exceeds the limit, exchanges get a grace allowance for the first breach, but subsequent breaches trigger a three-month pause.