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.

Both markets may be responding to the same developments, with conventional shares adjusting rapidly once trading resumes.

The growing activity outside Wall Street's operating hours comes with significant differences in market quality.

The IMF found that traditional exchanges remained substantially more liquid than tokenized trading platforms, with centralized crypto venues performing better than decentralized exchanges.

On decentralized platforms, relatively small transactions could produce disproportionately large price movements because of limited market depth and market-making activity.

Realized volatility across tokenized equities was about 1.5 times that of their traditional equivalents and rose further on decentralized venues.

The comparison partly reflects different trading windows, since tokenized products trade continuously while the traditional-market measure covers regular US hours.

Despite those differences, tokenized prices generally tracked their underlying securities during regular trading sessions. However, decentralized venues saw wider and more frequent price deviations, especially when trading volumes were low.

Those conditions could complicate expansion beyond the relatively small market currently served by tokenized equities.

The IMF estimated that public tokenized real-world assets, excluding repurchase agreements and stablecoins, had reached approximately $65 billion by July, compared with roughly $300 trillion in traditional capital-market assets.

The Fund said systemic risks remain limited at current adoption levels, but broader use of continuous trading and automated settlement could accelerate market stress.

Automated collateral management, for example, could trigger margin calls and forced liquidations outside conventional trading hours, potentially amplifying selling pressure when available liquidity is already thin.

The IMF identified legal certainty, regulatory clarity, interoperability between trading networks and reliable settlement assets as major constraints on further growth.

Questions also remain over the rights attached to tokenized securities, particularly whether holders receive direct ownership claims over underlying shares or contractual exposure to their prices.

To address the emerging risks, the IMF called for circuit breakers, trading halts and liquidity safeguards adapted to continuous markets, alongside stronger monitoring of connections between tokenized and traditional finance.

Regulators must also assess whether existing protections can operate during weekends and overnight trading, when automated liquidations may occur without the liquidity normally available during Wall Street's regular session.

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