Nasdaq’s push for tokenised securities: what it means for the buy side

Published on September 18, 2025 by Zahoor Bhat

Nasdaq’s recent filing with the SEC, seeking approval to list tokenised securities, has stirred significant interest in both traditional finance and the digital asset community. While tokenisation has been a buzzword for years, this move signals that the largest and most established equity exchanges are beginning to bring it into the regulatory mainstream. If successful, this could transform how markets operate, not in the distant future but over the next few years.

Basically, tokenisation means putting traditional assets (such as stocks or bonds) in a digital wrapper on blockchain, a development increasingly central to discussions around blockchain in capital markets. It is still the same asset, following the same rules, but settlement is faster, almost instant. US markets currently run on a T+1 (one-day) cycle, while previously, it was T+2. Tokenised trade enables settlement in seconds, not days. This means less risk of cash stuck in the middle, more cash free to be reused and less back-office work.

For buy-side firms – hedge funds, mutual funds, pension funds and family offices – the development is particularly very important. It promises faster settlement, more efficient use of capital and potential innovations in portfolio construction. However, it also brings with it new risks, operational demands and regulatory questions. This blog unpacks Nasdaq’s proposal, why it matters, what challenges it may introduce and what the buy side should be preparing for.

What Nasdaq is trying to do

The proposal centres on tokenising existing equities and ETFs. These tokenised instruments would

• Trade on the same order book as traditional shares, ensuring that liquidity is not fragmented.

• Retain the same legal rights such as ownership, dividends and voting as their traditional counterparts.

• Carry the same identifiers (CUSIPs), so that from a portfolio accounting perspective, they look identical.

• Continue to clear through existing institutions such as deposit trust companies, but settlement would occur almost instantly, thanks to blockchain-based representation.

The genius of Nasdaq’s design lies in its balance: embracing the efficiency of blockchain while maintaining the familiarity and protections of traditional securities markets—an approach that highlights the rising role of blockchain in capital markets. This hybrid approach could accelerate adoption.

Why this matters

1. Faster settlement and capital efficiency

US equities currently operate on a T+1 cycle, having moved on from a T+2 cycle. This means that trades executed are settled one day later, during which time capital remains locked. For large asset managers turning over billions a day, the cumulative effect of trapped liquidity is immense.

Tokenised settlement compresses this delay to minutes or even seconds. Imagine a USD100m trade: under T+1, USD200m of gross notional is tied up across counterparties for one day. With tokenised settlement, the same notional amount could be recycled almost immediately into new opportunities. This enhances liquidity, reduces counterparty risk and improves overall capital efficiency.

2. Trading flexibility

The introduction of tokenised securities could pave the way for extended or even 24x7 trading in the future. While Nasdaq has not committed to this yet, the digital rails make it technically feasible. For global asset managers, the ability to respond to macroeconomic events in real time, regardless of US market hours, would be a significant advantage.

Consider a buy-side desk that needs to adjust exposures after unexpected policy announcements in Asia. With tokenised trading, they could react immediately, instead of waiting for the New York market to open.

3. Operational simplicity (and new complexity)

At first look, tokenised securities seem simple since they look almost the same as traditional shares. When digging a bit deeper, however, the blockchain-related part brings a new set of challenges. Handling tokens means that firms have to manage private keys safely, work with custodians who can handle digital assets and make sure blockchain records match old legacy systems.

For operations teams, this usually means retraining staff, putting money into new systems and building fresh audit and compliance workflows. Firms that start early may find it easier later, when tokenised trading becomes standard.

4. Room for innovation

Tokenisation also opens the door to innovations that are almost impossible under current systems:

• Fractionalised shares: Investors could trade smaller increments of high-priced stocks such as Berkshire Hathaway, AutoZone or Seaboard.

• Programmable securities: Dividends and corporate actions could be automated through smart contracts.

• Custom baskets: Buy-side firms could create and trade ETF-like structures tailored to specific strategies, with lower operational overhead.

For allocators, these innovations mean greater flexibility in building targeted exposures for their portfolios.

The risks

Market change usually comes with a number of challenges. Nasdaq’s tokenisation proposal presents several risks:

• Custody and cybersecurity risks: Digital tokens are only as safe as the system protecting private keys. Even one mistake can cause loss of access.

• Liquidity fragmentation: Although Nasdaq intends to keep tokenised and traditional shares fungible, execution mechanics would determine whether liquidity remains unified.

• Operational wrinkles: Reconciling blockchain settlement with custodial records may create early friction.

• Regulatory uncertainty: The SEC must still approve the proposal. Additional conditions or restrictions could slow adoption.

What happens next

If the SEC approves Nasdaq’s proposal, pilot programmes could launch as early as in 2026, starting with liquid ETFs or large-cap stocks. Rollout is more likely to be gradual rather than a sudden shift, as operational and regulatory issues need time to settle. However, the competitive pressure is real, as crypto-native platforms are already experimenting with tokenised equities. For Nasdaq, moving early ensures it retains leadership as markets evolve with these developments.

What buy-side firms should be doing now

• Engage with custodians and prime brokers: Understand how they plan to support tokenised assets.

• Model funding and liquidity impact: Faster settlement changes cash flow dynamics; prepare for both risks and opportunities.

• Review legal agreements: Ensure that voting rights, dividends and proxy processes flow seamlessly in tokenised form.

• Pilot projects internally: Run proof-of-concept reconciliations between blockchain and legacy systems.

• Strengthen cyber practices: Private key management will be central to investment operations.

• Educate investment teams: Portfolio managers and traders should understand both the opportunities and the operational implications.

Global context

Tokenisation is not limited to Nasdaq or the US market. In Europe, exchanges such as the SIX and the Deutsche Börse have already begun experimenting with tokenised bonds and equities. Singapore’s MAS has pushed ahead with Project Guardian, focusing on tokenised funds and fixed income. These international pilots show that tokenisation is moving from theory to practice.

For global buy-side firms, this means strategies would need to account for different paces of adoption across jurisdictions. Early movers may find arbitrage opportunities, while slow movers may face higher costs and slower processes.

How Acuity Knowledge Partners can help

Acuity Knowledge Partners set up dedicated teams of analysts (CAs, MBAs, CFAs) to support our clients on a wide range of activities involving investment research (long/short idea generation), macroeconomic research, thematic research, sectoral coverage, financial analysis and building databases or libraries across asset classes. Each output is tailored to meet client specifications, ensuring a unique, sustainable research edge.

References:

• https://www.reuters.com/business/finance/nasdaq-makes-push-launch-trading-tokenized-securities-2025-09-08/

•  https://www.coindesk.com/policy/2025/09/08/nasdaq-seeks-nod-from-u-s-sec-to-tokenize-stocks

• https://www.nasdaq.com/newsroom/qa-nasdaqs-new-proposal-tokenized-securities

• https://www.reuters.com/business/coinbase-seeking-us-sec-approval-offer-blockchain-based-stocks-2025-06-17/

• https://www.reuters.com/sustainability/boards-policy-regulation/secs-crypto-mom-says-tokenized-securities-are-still-securities-2025-07-09/

• https://www.mas.gov.sg/schemes-and-initiatives/project-guardian

• https://www.fintechfutures.com/tokenisation/mas-project-guardian-pilots-settlement-of-tokenised-fund-subscriptions-and-redemptions-using-swift

• https://www.fca.org.uk/news/statements/fca-welcomes-project-guardian-report-tokenisation

• https://www.icmagroup.org/DLT-platforms-complementing-section-6-Data-Model-of-GFIF.pdf

• https://www.icmagroup.org/fintech-and-digitalisation/fintech-resources/tracker-of-new-fintech-applications-in-bond-markets/

• https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1121.pdf

• https://www.finextra.com/blogposting/28839/tokenised-stocks-what-they-are-what-they-arent-and-why-they-matter

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