IMF finds over half of tokenized US stock trading happens after Wall Street closes

More than half of sampled tokenized US stock trading occurs outside Wall Street's regular hours, the International Monetary Fund (IMF) found.

The IMF's October Global Financial Stability Report also showed that approximately 80% of tokenized equity transactions involved less than one share, providing evidence of demand for fractional investments and around-the-clock access to American securities.

However, the study found that tokenized equities experienced roughly 50% higher realized volatility than their traditional counterparts, while fragmented trading venues offered significantly weaker liquidity.

The findings come as exchanges and financial institutions expand efforts to bring US equities onto blockchain infrastructure, potentially challenging conventional market hours and settlement arrangements.

The IMF examined five of the most actively traded tokenized US equity products issued by Ondo and xStocks, covering exposure to the S&P 500, Nasdaq, Tesla, Alphabet and Nvidia.

The analysis covered 11 centralized and decentralized trading venues, with more than 2 million five-minute price and trading-volume observations collected over 365 trading days.

The sampled products represented approximately $345 million in market value, or 15% of the $2.3 billion tokenized equity market as of July 31.

The trading patterns showed that investors were actively using features unavailable during conventional US stock-market sessions.

More than half of trading volume occurred outside the regular 9:30 a.m. to 4 p.m. Eastern session, including overnight and weekend periods.

The IMF said the activity suggested demand from investors operating in different time zones and those seeking to respond to market developments without waiting for American exchanges to reopen.

The predominance of transactions smaller than one share also pointed toward a retail-oriented market, although the researchers inferred that participation from trade sizes rather than directly identifying individual investors.

More significantly, the study found that overnight tokenized-stock prices contained information subsequently reflected in conventional equity markets.

Using centralized-exchange data, IMF researchers compared overnight tokenized price movements with the performance of their underlying securities during the first five minutes of the next US trading session.

The estimated pass-through ranged from 87% to 99%, indicating a strong relationship between overnight tokenized returns and subsequent price adjustments in traditional markets.

The findings suggest that tokenized venues can reflect information while conventional exchanges are closed, although the analysis does not establish that on-chain trading causes the corresponding price movements.