Taken together, the features listed below form the foundation of the thesis that security tokens will see widespread adoption across numerous asset classes in the coming years. Eastern Time each weekday, with the exception of holidays. Teams all over the world are working on tokenizing assets and some observers suggest that this will accelerate the integration of global markets.
The first four are pretty straight-forward, and I’ve already written about liquidity and automated compliance in other posts, so I’ll review these six topics only briefly. After the closing bell on Friday, you can’t trade your stock again on major exchanges for over 65 hours. Any number of information events can and do happen during these breaks. stock market is too narrow because this is not solely a U. Around-the-clock trading hours will accommodate all time zones.
There are complexities such as short selling and margin buying.
Blockchain has the potential to increase settlement speed for securities, but it’s more complicated than a comparison to cryptocurrencies.
A typical retail investor cannot harness the resources required to buy a Manhattan high rise.
The investor is left with two options: (1) Forego exposure to Manhattan commercial real estate in their investment portfolio, or (2) gain exposure through an intermediary, for example a publicly traded Real Estate Investment Trust (REIT), where it is often bundled with a portfolio of other buildings of varying quality and characteristics.Security tokens offer an efficient path to fractionalize a single high value asset.As more assets are fractionalized, we can achieve more optimal asset allocation at the retail level.Settlement is when ownership of the assets actually changes hands.Exchanges like NASDAQ and NYSE can asset transfers takes time.The SEC recently adopted a shortened settlement cycle for most broker-dealer transactions to T 2.The “2” is days, meaning the ownership doesn’t change hands for two days after trade execution.However, several parts of the issuance process will eventually be automated, which will reduce costs in the long run.Post-issuance, there are a lot of administrative costs around ownership reconciliation.The degree to which these processes can be automated through interoperable smart contracts will determine the gains in settlement speed.Advisory services around securities issuance are costly, and that’s not going to change in the near term.