- Ondo Finance urges the SEC to delay Nasdaq’s tokenized securities plan due to unclear settlement procedures.
- Public disclosure from DTC could ensure fairness and transparency.
Ondo Finance has called on the U.S. Securities and Exchange Commission (SEC) to delay Nasdaq’s plan to allow trading of tokenized securities. The firm cites transparency gaps that could create unfair advantages in the market. This move highlights the challenges of integrating blockchain-based assets into traditional financial systems.
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Nasdaq’s Settlement Process Remains Unclear
Nasdaq’s proposed rule change would enable trading in tokenized securities. The exchange expects the Depository Trust Company (DTC), the U.S. central clearinghouse, to handle post-trade settlement. However, the exact process is not publicly documented.
In a letter to the SEC, Ondo Finance noted that Nasdaq’s plan is based on a “preliminary sense” of how DTC might settle tokenized securities. This leaves the SEC without the full information needed to evaluate whether the rule change complies with the Securities Exchange Act of 1934.
Smaller Firms Could Be Disadvantaged
Ondo Finance, which offers tokenized exposure to U.S. stocks and short-term Treasury instruments, warns that vague settlement procedures favor larger, established firms. Smaller or newer companies may not have access to essential information, making it harder for them to plan or respond to market changes.
Public Disclosure Could Build Confidence
Ondo Finance suggests that transparency from DTC could resolve these concerns. Making the settlement process public would allow regulators and all market participants to assess risks clearly. According to Ondo, this step would help create a level playing field for firms of all sizes.
SEC Review Could Shape Tokenized Markets
The firm is urging the SEC to conduct a formal review, which could lead to disapproval of Nasdaq’s rule change. Regulatory oversight is crucial as tokenized securities gain popularity. Transparent and fair practices will help build investor confidence and support the long-term adoption of blockchain-based assets.
Nasdaq’s effort to modernize trading through tokenization shows promise. However, Ondo Finance’s concerns underscore the need for clarity, fairness, and robust regulatory frameworks. Without these, tokenized markets may face obstacles in gaining broad acceptance.
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