Notice2025-23073
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend the Exchange's Rules To Enable the Trading of Securities on the Exchange in Tokenized Form
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 17, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 240 (Wednesday, December 17, 2025)</title>
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[Federal Register Volume 90, Number 240 (Wednesday, December 17, 2025)]
[Notices]
[Pages 58646-58648]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23073]
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SECURITIES AND EXCHANGE COMMISSION
[Release 34-104384; File No. SR-NASDAQ-2025-072]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To Amend the Exchange's Rules To Enable the
Trading of Securities on the Exchange in Tokenized Form
December 12, 2025.
I. Introduction
On September 8, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend the Exchange's rules to enable the
trading of securities on the Exchange in tokenized form. The proposed
rule change was published for comment in the Federal Register on
September 22, 2025.\3\ On November 3, 2025, pursuant to Section
19(b)(2) of the Act,\4\ the Commission designated a longer period
within which to approve the proposed rule change, disapprove the
proposed rule change, or institute proceedings to determine whether to
disapprove the proposed rule change.\5\ This order institutes
proceedings under Section 19(b)(2)(B) of the Act \6\ to determine
whether to approve or disapprove the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 103989 (September
16, 2025), 90 FR 45426 (``Notice''). Comments received on the
proposed rule change are available at: <a href="https://www.sec.gov/comments/sr-nasdaq-2025-072/srnasdaq2025072.htm">https://www.sec.gov/comments/sr-nasdaq-2025-072/srnasdaq2025072.htm</a>.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 104173, 90 FR 51424
(November 17, 2025). The Commission designated December 21, 2025, as
the date by which the Commission shall approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule change.
\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Summary of the Proposal
As described in more detail in the Notice,\7\ the Exchange is
proposing to amend its rules to enable the trading of equity securities
and exchange traded products on the Exchange in tokenized form.\8\
Specifically, proposed rules Equity 1, Section 1, and Equity 4, Rules
4756, 4757, and 4758 would specify
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how Nasdaq proposes to trade tokenized securities.
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\7\ See Notice, supra note 3. Capitalized terms not defined in
this order are defined in the Exchange's rules.
\8\ See id. at 45427.
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First, the Exchange is proposing to amend its definition of a
security, at Equity 1, Section 1, to include tokenized securities.\9\
The proposed rule change specifies that the term ``tokenized'' in this
instance refers to digital representations of paper securities that
utilize digital ledger or blockchain technology, as opposed to
``traditional'' securities, which are also digital representations of
paper securities, but do not utilize blockchain technology.\10\
According to the Exchange, as long as tokenized securities are fungible
with, have the same CUSIP number as, and afford their holders the same
material rights and privileges as do traditional securities of an
equivalent class, the Exchange would trade tokenized securities
together with traditional securities on the same Order Book and
according to the same execution priority rules.\11\ A tokenized equity
security would be deemed to provide the same material rights and
privileges as a traditional security if, among other things, it conveys
an equity interest in an underlying company, a right to receive any
dividends that the company issues to its shareholders, a right to
exercise any voting rights that shareholders are due, and a right to
receive a share of the residual assets of the company upon
liquidation.\12\ The Exchange would not treat tokenized instruments to
be equivalent to their traditional counterparts if they do not convey
such rights, in whole or in material part, or share the same CUSIP, but
instead the Exchange would treat these instruments as distinct (e.g.,
derivative securities or ADRs).\13\
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\9\ See id. at 45429.
\10\ See id.
\11\ See id.
\12\ See id. Nasdaq believes that tokenizing securities should
not occur in a manner that deprives issuers of their ability to
determine where and how their shares trade. However, according to
Nasdaq, it is limited in its ability to afford issuers a choice as
to whether their shares are or become tokenized by other markets.
Nevertheless, Nasdaq encourage the Commission to consider the issue
as it develops a new regulatory regime for tokenized securities. See
id. at 45428 n. 8.
\13\ See id. at 45429. The rule proposal does not address
whether and how Nasdaq may choose to trade these non-fungible
tokenized instruments in the future.
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Second, the Exchange is proposing to amend its Order Entry Rule, at
Equity 4, Rule 4756, to describe how a Participant \14\ can communicate
its desire to clear and settle a security in tokenized form.\15\ The
proposed amended Rule states that a Participant that wishes for its
order to clear and settle in tokenized form must notate its preference
upon entry of the order in the System \16\ by selecting a flag that the
Exchange designates for this purpose, in accordance with the Exchange's
procedures.\17\ When a Participant enters an order with the
tokenization flag selected, the Exchange will communicate the
Participant's order handling instruction to The Depository Trust
Company (``DTC'') on a post-trade basis.\18\ DTC would then carry out
the Participant's instruction in accordance with DTC's rules, policies,
and procedures, or if it is unable to do so, it would make alternative
clearing and settlement arrangements with the Participant.\19\
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\14\ Nasdaq Rules Equity 1, Section 1(a)(5).
\15\ See Notice, supra note 3, at 45429.
\16\ Nasdaq Rules Equity 1, Section 1(a)(3).
\17\ See Notice, supra note 3, at 45429.
\18\ See id.
\19\ See id.
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Third, the Exchange is proposing to amend its Book Processing Rule,
at Equity 4, Rule 4757, to specify that if an order contains tokenized
securities or indicates a preference to clear and settle securities in
token form, it would not affect the priority in which the Exchange
executes that order.\20\
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\20\ See id.
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Fourth, the Exchange is proposing to amend its Order Routing Rule,
at Equity 4, Rule 4758, to state that when the Exchange routes orders
that Participants have designated for clearing and settlement in token
form, in accordance with the Exchange's order entry rules and
procedures, then the Exchange will communicate this tokenization
instruction to DTC upon receiving an execution for an order that was
routed to another trading venue.\21\
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\21\ See id.
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Nasdaq represents that apart from the above, as far as Nasdaq's
systems and matching engine are concerned, the Exchange's trading
procedures and behavior will be the same regardless of whether a member
opts to trade tokenized or traditional shares of a stock.\22\ The
proposed rule change to offer trading in tokenized securities would
become effective once the requisite infrastructure and post-trade
settlement services have been established by DTC, with any required
regulatory approvals having been obtained.\23\ It is Nasdaq's
understanding that DTC is working to develop the necessary
infrastructure, services, and procedures to facilitate such
tokenization and the related post-trade settlement infrastructure and
services.\24\ The post-trade settlement services, including the
eligibility of a member's orders to be settled in tokenized form, would
be determined by DTC's policies and procedures.\25\
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\22\ See id. Nasdaq's pricing structure and rates will not vary
depending upon whether a transaction involves a share of a tokenized
stock.
\23\ See id. at 45430.
\24\ See id.
\25\ See id.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-
NASDAQ-2025-072 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \26\ to determine whether the proposed rule
change should be approved or disapproved. Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the proposed rule change. Institution of proceedings does not
indicate that the Commission has reached any conclusions with respect
to any of the issues involved. Rather, the Commission seeks and
encourages interested persons to provide comments on the proposed rule
change.
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\26\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\27\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with the Act and, in
particular, with (1) Section 6(b)(5) of the Act,\28\ which requires,
among other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, to protect investors and the public interest, and (2)
Section 6(b)(8) of the Act, which requires that the Exchange's rules do
not impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.\29\
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\27\ Id.
\28\ 15 U.S.C. 78f(b)(5).
\29\ 15 U.S.C. 78f(b)(8).
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice, in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on whether the proposal to
[[Page 58648]]
trade securities in tokenized form is designed to be consistent with
the Act or raises any new or novel concerns not previously contemplated
by the Commission.
IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Sections 6(b)(5) and 6(b)(8) or any other provision of
the Act, and the rules and regulations thereunder. Although there do
not appear to be any issues relevant to approval or disapproval that
would be facilitated by an oral presentation of views, data, and
arguments, the Commission will consider, pursuant to Rule 19b-4,\30\
any request for an opportunity to make an oral presentation.\31\
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\30\ 17 CFR 240.19b-4.
\31\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Pub. L. 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by January 7, 2026. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
January 21, 2026.
Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#6012150c054d030f0d0d050e1413201305034e070f16"><span class="__cf_email__" data-cfemail="1e6c6b727b337d7173737b706a6d5e6d7b7d30797168">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-072 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NASDAQ-2025-072. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-NASDAQ-2025-072 and should be submitted
on or before January 7, 2026. Rebuttal comments should be submitted by
January 21, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23073 Filed 12-16-25; 8:45 am]
BILLING CODE 8011-01-P
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