SEC Approves Nasdaq Rule Change to Enable Trading of Tokenized Securities via DTC Pilot Program
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On March 18, 2026, the SEC approved Nasdaq's proposed rule change to allow trading of certain equity securities and ETFs in tokenized form on its exchange. This is limited to a pilot program run by the Depository Trust Company (DTC) under a December 11, 2025 no-action letter. Eligible securities include Russell 1000 Index stocks and major index-tracking ETFs. Traders must flag orders at entry to request tokenization; trades clear and settle via DTC in either traditional or tokenized form using blockchain. Tokenized shares trade on the same order book with identical priority, pricing, and rights as traditional shares sharing the same CUSIP and symbol. Nasdaq systems do not validate eligibility at order entry, and all other trading rules, fees, and surveillance remain unchanged. The change takes effect after DTC infrastructure is ready, with at least 30 days advance notice to members.
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Key Changes
- Amends Equity 1, Section 1 to define securities as tradable in traditional or tokenized form using blockchain during DTC Pilot
- Requires DTC Eligible Participants to select a specific tokenization flag on order entry in Equity 4, Rule 4756 to request tokenized clearing and settlement
- Tokenized shares trade on same order book with identical execution priority as traditional shares sharing same CUSIP, symbol and rights
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