Most Tokenized Stock Trading Happens Outside U.S. Market Hours, IMF Finds

More than half of all trading in tokenized U.S. stocks happens while Wall Street is closed, according to new data from the International Monetary Fund.

The figure comes from the tokenization chapter of the IMF’s Global Financial Stability Report, which the fund released on Oct. 8. Titled “Scaling Tokenization: New Efficiencies, New Vulnerabilities,” the chapter puts the tokenized equity market at about $2.3 billion as of July 31, a small slice of roughly $65 billion in publicly tokenized real-world assets outside of repo.

To measure how that market behaves, IMF staff studied five of the most liquid tokens issued by Ondo Finance and Backed Finance’s xStocks, which track the S&P 500, the Nasdaq, Tesla, Google and Nvidia. The sample spanned 11 venues and 365 trading days and was worth about $345 million, or roughly 15% of the market. Ondo and Backed together hold more than 70% of tokenized equity value, and their products target investors outside the U.S. Ondo, for example, expanded its tokenized stock platform to BNB Chain for users in Asia and Latin America.

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About 80% of the trades studied were for less than a single share, which the IMF read as a sign that small retail investors dominate. The IMF said in the report that round-the-clock access is “not merely a technical feature but a source of demand,” especially among investors in time zones far from New York.

The tokens also appeared to carry useful price information. Within five minutes of the U.S. opening bell, the underlying stocks absorbed more than 87% of the move their tokenized versions had made overnight, the IMF found.

Realized volatility on tokenized venues ran about 1.5 times that of the traditional shares. Liquidity was weakest on decentralized exchanges, with centralized exchanges in between. Prices still tracked the underlying stocks closely, especially on busier venues.

The IMF said “tokenized equity markets are so far less liquid, more volatile, and more fragmented than traditional ones,” mainly because the market is small. The IMF said its “empirical findings should be interpreted with caution.”

“For now, systemic risks remain limited,” the IMF said. Its policy recommendations include asking authorities to “design circuit breakers and liquidity safeguards for tokenized trading environments” and to regulate under the principle of “same activity, same risk, same regulatory outcome.”

The IMF said the central question is “whether tokenized market infrastructure, legal foundations, liquidity arrangements, and risk controls are adequate if tokenization were to achieve broader adoption.”

Related Listen: Should Stock Tokens Be Limited to KYC’d Users? Or Be Tradeable by Anyone?

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