On April 9, 2026, Eastern Daylight Time, the New York Stock Exchange (NYSE) submitted a rule amendment application numbered SR-NYSE-2026-17 to the SEC, intending to add Rule 7.50, which opens up technical and compliance avenues for tokenized securities to be traded on the NYSE. Just less than a month earlier, a similar rule for tokenized securities on Nasdaq was approved by the SEC on March 18, marking a sequential layout under the same regulatory coordinates for the two major exchanges in the United States. An intuitive suspense arises: if tokenization can be integrated into the existing securities trading and settlement system without abruptly overturning it, could it become a new "foundation" for reshaping Wall Street's infrastructure, while avoiding triggering severe backlash from regulators and the banking system?

NYSE Pursues Nasdaq: The Starting Line of the Tokenization Race

In chronological order, Nasdaq took the lead in revising its tokenized securities rules — its proposal was approved by the SEC on March 18, 2026, sending a clear signal to the market that "compliant tokenized securities can enter mainstream exchange frameworks." It wasn't until April 9 that the NYSE formally submitted its amendment SR-NYSE-2026-17 to the SEC, proposing the addition of Rule 7.50. The time gap is not long, but it clearly illustrates a competitive race within Wall Street's institutions: whoever first completes compatibility with tokenization technology will have a better chance of securing the next phase of order flow and market influence.

Within this design, the core goal of NYSE Rule 7.50 is not to create a "new on-chain market," but to allow tokenized securities to circulate under the same trading framework as traditional stocks and ETFs. Whether it's listing, matching, or risk management processes, tokenized securities are integrated into the original exchange ecosystem, with the difference being that the underlying registration and settlement vehicle has transitioned from traditional bookkeeping systems to tokenized forms. This means tokenization is embedded rather than entirely overhauling existing infrastructure.

Even more subtly, the NYSE repeatedly emphasizes in its documents that its rule design is "consistent" with the already approved Nasdaq version (according to a single source). This is not a simple technical reproduction, but a deliberate regulatory noise reduction strategy: under the premise that the SEC has already opened a "door" for Nasdaq, following an accepted framework can significantly reduce regulatory uncertainties and approval struggles, shifting the debate from "should we tokenize" to "how to safely tokenize under existing rules."

From DTC Pilot to Shared CUSIP: Changing the Vehicle, Not the Asset

The NYSE's amendment is not a spontaneous idea, but is based on a three-year tokenization pilot framework established by the Depository Trust Company (DTC) (according to a single source). Over these three years, DTC has conducted numerous process experiments on how to introduce on-chain registration and tokenized representation without tearing apart the existing clearing architecture — from account structures to clearing instructions to custody interfaces, accumulating a set of technological and process foundations that can be implemented at the exchange rule level. NYSE Rule 7.50 essentially "puts these pilot results on the market."

One of the most critical points is that tokenized securities must share the same CUSIP code as their corresponding traditional securities (according to a single source). CUSIP is a unified "identity card" for identifying securities in the U.S. market. By allowing tokenized and traditional securities to use the same CUSIP, it clearly indicates from a regulatory and accounting perspective that the essence of the asset has not changed; only the vehicle for accounting and holding has migrated from traditional accounts to tokenized certificates. This way, asset categories, rights structures, and information disclosure obligations are locked within the old order, and tokenization is merely an "upgrade of the shell."

To further alleviate regulatory and institutional concerns regarding the "parallel market," the proposal also clarifies that all existing short-selling rules, risk management mechanisms, and market surveillance requirements will continue to apply equally to tokenized securities (in-depth background information). This means that short-selling constraints, margin standards, mechanisms for halting trading due to abnormal fluctuations, and anti-manipulation monitoring will not be loosened due to different technological formats. For the SEC and large institutions, this is akin to a commitment: tokenized securities will not create a shadow market outside the traditional regulatory view but will fully accept current compliance and risk control procedures.

The Boundary of T+1 Settlement Has Been Torn Open

Just as the NYSE was promoting its tokenization rules, the American securities market had just completed the massive project of transitioning from T+2 to T+1 settlement cycles. In this context, reintroducing a tokenized settlement scheme based on on-chain registration carries strong signals: regulatory agencies and exchanges are willing to explore more efficient technological paths just after compressing the settlement cycle, choosing to start from the edges rather than immediately overturning the T+1 framework.

Theoretically, one of the main attractions of tokenization is to pull settlement from "T+1" towards "near real-time". When the rights of securities are registered on-chain in token form and can be programmatically transferred, the time gap between trade matching and final delivery can be significantly shortened, potentially restructuring collateral demands, counterparty risks, and systemic leverage. At the same time, the dependence on central clearinghouses and multi-tiered intermediaries would also be weakened, with some clearing and custody functions expected to be "embedded" into the logic of asset transfers at the technical level.

However, in practical operations, the SEC and exchanges have chosen to maintain gradual experimentation within the T+1 framework at the rule level. This decision is based on several considerations: firstly, the market infrastructure has just undergone a systemic overhaul from T+2 to T+1, and the risk models, operational processes, and participant behaviors have not yet fully rebalanced; carelessly introducing real-time settlement may disrupt liquidity supply and market-making structures; secondly, the profit models and risk exposures of intermediaries such as banks, broker-dealers, and clearinghouses heavily rely on "time differences," and directly restructuring settlement cycles without corresponding capital rules and liquidity regulatory upgrades may bring difficult-to-price systemic consequences. Therefore, the current version of tokenization is more like tearing open a technological window on the edge of T+1 rather than immediately rewriting the entire sequencing logic.

The Subtle Moment Between Banks and the Federal Reserve: Who Says Settling Power Rules?

Discussions around the settlement of tokenized securities will quickly extend to a more macro-level balance sheet dimension. According to a single source, Daley noted: "The demand for reserves in the banking system may decrease, thereby also shrinking the size of the Federal Reserve's balance sheet." This judgment originally targeted the long-term trends in macro liquidity and bank reserve needs, but in the context of tokenized settlement scenarios, it gains a new annotation: if the settlement efficiency of securities and payments continues to improve, the "residence time" of funds within the banking system is compressed, and commercial banks may correspondingly decrease their reliance on excess reserves and wholesale funding.

As tokenization makes securities settlement more efficient and reduces multi-layered intermediary participation, the deposit basis and reserve requirements of commercial banks may be indirectly impacted. On one hand, businesses and institutional investors might prefer managing short-term funds via highly liquid tokenized assets or centralized clearing accounts rather than traditional checking accounts; on the other hand, if the credit risk and time lags in the settlement chain are significantly reduced, the various fees and spreads charged by banks for "assuming settlement risks" will also be compressed. These accumulated changes can inversely affect the position of the banking system in the overall financial system concerning fund transfers.

In a longer cycle, it is foreseeable that the game over the settling power and liquidity control between the SEC, exchanges, banks, and the Federal Reserve will become increasingly complex. The SEC and exchanges wish to enhance market transparency and execution efficiency through tokenization and more efficient settlement technologies; commercial banks must accept the reality that some clearing functions will be absorbed by technology, while maintaining their deposit and credit capacity; the Federal Reserve will need to recalibrate boundaries among its visions of balance sheet reduction, payment system security, and financial stability. In this chess game, tokenized securities are merely the first move, yet they have already touched upon the underlying logic of reserve currency, bank balance sheets, and central bank toolkits.

Only a Testing Ground for Russell 1000 and Large-Cap ETFs

In asset scope selection, the New York Stock Exchange and Nasdaq have taken a highly consistent cautious approach: the initial applicable scope is limited to the constituents of the Russell 1000 Index and major Index ETFs (in-depth background information). The Russell 1000 encompasses the largest U.S.-listed companies by market capitalization, and mainstream large-cap ETFs represent a type of security that is the most mature, structurally transparent, and fully involved in market-making. Limiting the tokenization pilot to these two sectors represents a typical "test the waters on the most controllable assets" mindset.

Blue-chip stocks and large-cap ETFs have several inherent advantages that make them ideal candidates for tokenization trials: firstly, these assets exhibit ample secondary market liquidity and sufficient order book depth, helping to absorb potential micro-structural frictions when settlement forms change; secondly, they are already under significant compliance and information disclosure regulations, adding a technological dimension of tokenization without significantly altering investor protection intensity; thirdly, the market-making, borrowing, and hedging systems surrounding these assets are well-developed, making it easier to observe the actual impacts of tokenization on market-making models and repo and securities lending markets.

At the same time, this closed testing ground sends a clear signal regarding small-cap stocks and other asset classes: the threshold for tokenization does not lie in technology, but in liquidity quality, the completeness of information disclosure, and the controllability of market-making systems. Only when the experiments on the Russell 1000 and large-cap ETFs prove that tokenization will not disrupt price discovery and risk transmission mechanisms, will regulators have room to consider expanding the scope to small-cap and alternative assets characterized by higher volatility and information asymmetry. In a sense, the current version of the rules represents an implicit "access threshold": who can enter the world of tokenization will first depend on who has a sufficiently robust traditional market structure.

Tokenization Is Not a Revolutionary Storm but an Internal Upgrade

In examining the path choices of the NYSE and Nasdaq, a common underlying theme is evident: technological upgrades are accomplished within the old order by sharing CUSIPs and adhering to the existing regulatory framework. Tokenized securities are seen as an enhancement of the bookkeeping and settlement vehicles rather than a disruption of asset categories and regulatory attributes; all existing rules on short-selling, risk control, and market surveillance continue to apply, which means regulators have not relaxed their vigilance against market manipulation and systemic risks but have instead integrated new technologies into a familiar toolbox.

Under such a framework, the short-term direct impact of tokenization on trading volume and pricing mechanisms is likely limited. Matching still occurs within the same order book, pricing and transaction logic remain unchanged, and the behavioral constraints on market makers and institutional investors are consistent with the past. However, at the level of settlement and liquidity structure, tokenization may plant the seeds for profound transformations: the shortening of settlement times, the enhancement of collateral efficiency, and the slimming down of intermediary layers all possess the potential to rewrite the flow paths of funds in the securities market over the course of several years, if not a decade.

Expanding the perspective further, in the future as more major asset classes, cross-border securities, and even bank liabilities gradually become incorporated into the tokenization framework, the power distribution on the traditional financial landscape is likely to undergo a reshuffle. The functional boundaries between clearinghouses, custodial banks, and large banks will become increasingly blurred, while the voice of exchanges and technology providers in infrastructure may rise; central banks and regulatory bodies will need to find a new balance between maintaining system stability and encouraging efficiency innovation. The NYSE's bet on tokenization may not be a revolutionary storm that immediately overturns Wall Street but could very well be the "new foundation" laid in advance for the next round of infrastructure reconstruction.

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