NYSE’s owner is backing 24/7 stock tokens without Wall Street’s usual price rules

The company that owns the New York Stock Exchange wants people to be able to buy stocks 24/7. Given the trading volume crypto and other tokenized assets have seen in the past year or so, the decision to introduce stock tokens comes as no surprise.

People want to trade all the time, and now institutions want a piece of that. What surprises people is that the new 24/7 exchange won't use NYSE prices to determine what stocks cost once the tradfi market closes.

The price people pay for off-market trading will differ based on how much stock others have put up for sale in a DeFi-style trading pool, not a new bid on NYSE.

The experiment isn't coming from some tiny crypto startup trying to get Wall Street's attention. OKXICE is owned by Intercontinental Exchange (ICE) and an affiliate of OKX.

In its public notice, OKXICE said stock tokens will trade around the clock using technology behind Uniswap, with buyers dealing against pools of assets rather than the familiar lines of bids and offers.

Sixteen companies had already objected to third-party tokenized versions of their stocks trading on OKXICE as of Oct.19, including Microsoft, Alphabet, and Goldman Sachs.

Fifteen of them were on the exchange's original proposed roster of 62 companies, so roughly 25% of that list had objected. The sixteenth, Cerebras, wasn't on the original roster. The rest hadn't objected publicly by then, which doesn't amount to support.

A tokenization provider would acquire ordinary shares through a registered broker-dealer and issue one corresponding digital token for each share held, with the underlying stock backing the tokens one for one.

The tokens would also come with arrangements covering dividends, voting, and other shareholder rights.

Under the SEC exemption issued in September, eligible tokenized shares must provide rights equivalent to the conventional shares they represent. That's why a blockchain receipt that just imitates a stock's price doesn't qualify under this program.

Ordinary US exchanges use order books, which collect offers to sell and bids to buy. Those prices are part of a wider system that connects exchanges through market data and rules meant to prevent trades from going through at inferior prices when better-protected quotations are available elsewhere.

Stock prices can differ between exchanges, but rules govern how those differences are handled.

In OKXICE's new arrangement, traders would deposit stock tokens and stablecoins into an automated pool, and a buyer would trade against the pool's inventory.

Software adjusts the price as the token-to-dollar balance shifts, so a single purchase can make each additional fraction of a share more expensive than the last.

DeFi protocols have used versions of this model for years, but it's not how a brokerage account typically buys Coca-Cola stock. On OKXICE, the stablecoin side could include USDC, and the proposed pools would operate on XLayer with Uniswap v4 software.

Traders would still need identity checks and permission to trade, so this isn't an anything-goes corner of DeFi dressed up as a stock market.

OKXICE's notice says the exchange won't be subject to Regulation NMS, the framework that includes some of the ordinary price protections connecting US equity markets.

The SEC has granted qualifying tokenized stock exchanges temporary, conditional relief from registering as conventional exchanges for five years, along with requirements covering shareholder rights, permitted trading activity, issuer objections, and formal trading halts.

Antifraud rules still apply, and brokers handling covered customer orders can have their own best-execution obligations. Those legal boundaries show that the token can represent the same ownership rights while its exchange follows different pricing rules.

Take a hypothetical pool containing 100 stock tokens and $10,000 in stablecoins, with an initial price of $100 per token. At the beginning, that matches the assumed price of the stock on a regular exchange, so the two markets appear to agree on what one share is worth.

Put a $1,000 buy order into that pool, though, and the math suddenly becomes much more interesting. In a normal purchase at a fixed $100 price, that money would buy ten shares, ignoring fees.

In this pool, the purchase adds dollars and removes tokens, so the software sets progressively higher prices as the buyer drains the available inventory. Under a basic constant-product formula, which is the pricing family described in OKXICE's notice, the customer ends up with about 9.09 tokens rather than ten.

That works out to an average cost of $110 per token. The stock's reference price hasn't moved from $100 in this example, and the holder has received tokens representing roughly $909 worth of shares at that reference price despite spending $1,000.

The last token in the transaction is more expensive than the first, and the pool's price for the next tiny purchase has climbed to around $121. The model charges more as the order consumes inventory.

Give that pool ten times as many shares and dollars, and the same $1,000 purchase would average roughly $101 per token. Give it a hundred times as much, and the average would fall to about $100.10.

Larger pools absorb orders with less price movement, assuming the other conditions stay the same, which is why the amount available to trade is as important as the starting quote.

Original hypothetical calculations using a full-range constant-product pool and a stablecoin worth $1, with fees, outside price movements, and arbitrage excluded.

OKXICE's pools let providers concentrate their money within selected price ranges, which can make trades near the current price much cheaper than the simple model implies. The trade-off is that liquidity concentrated inside one range can run out, leaving a bigger order to reach into another range with less inventory and a worse price.

Two pools with the same total dollar value can therefore offer very different deals to the person pressing Buy.

In the simple model, a $1,000 purchase requires $100,000 of starting stablecoins to keep its average price within 1% of the assumed $100 reference, while reducing that markup to 0.1% requires $1 million.

Those numbers show why a banner displaying the total money deposited into a venue tells a customer much less than knowing how much of that money is available close to the price they want.