The stock market is becoming more accessible than ever before – thanks to tokenised stocks. These digital assets mirror traditional shares on a blockchain, removing geographic barriers and offering potential 24/7 flexibility. This guide will help you navigate the mechanics of tokenised derivatives.
Tokenised stocks are digital representations of traditional company shares that exist as derivative contracts on a shared digital ledger (blockchain). They act as a bridge between established stock markets and digital infrastructure. This means you can get exposure to the price movements of equities without being restricted by conventional stock exchange hours or intermediaries.
A key feature of tokenised stocks is their 1:1 backing to actual shares. In most regulated models, each digital token represents the economic value of a real underlying share in a company, like Apple or Tesla. These shares are held by a licensed custodian to ensure your token stays linked to the asset's real-world value.
Take a look at our guide to tokenised stocks
Tokenised stocks work through a multi-step process that bridges traditional finance with blockchain technology. First, a regulated financial institution or platform acquires and holds actual company shares. A tokenisation platform then issues digital tokens on a distributed ledger that represent those specific shares.
Smart contracts, which are ‘self-executing’ digital programmes, are used to automate the recording and transfer of these tokens, all while ensuring they maintain a 1:1 relationship with the underlying asset value.
When a trade happens, the blockchain enables ‘atomic settlement’. This means the exchange of ownership and payment happens near-instantly, and at the same time.
Read more about how tokenised stocks work
Blockchain tokens can represent tiny portions of a single share. This lowers the barrier to entry, letting you get price exposure to small amounts of higher-value shares that might otherwise be out of reach.
Investing in tokenised stocks offers a level of global accessibility that traditional markets often lack. Blockchain networks operate across borders, removing many of the geographic hurdles. This democratises the market for participants who might not have access to international brokerage accounts.
While traditional stock trades often take two business days (T+2) to settle, blockchain can achieve atomic settlement. Because the exchange of money and assets happens simultaneously, counterparty risk is reduced and intermediaries aren’t needed during clearing.
While tokenised assets aim to mirror traditional equities, there are some important differences in how they’re structured legally and operationally.
Tokenised stocks | Traditional shares | |
Settlement time | Near-instant (atomic) | T+2 business days |
Trading hours | Potential 24/7 access | Standard market hours |
Fractional access | Native to the technology | Often limited |
Voting rights | Usually limited or none | Direct legal right |
Record keeping | Distributed Ledger (DLT) | Centralised register |
Explore more differences between tokenised stocks and traditional shares
Regulatory bodies, such as the IMF, have noted that speed and automation can introduce new vulnerabilities that aren’t typically found in traditional financial systems. Investors also have to consider:
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All investments involve risk, and not all risks are suitable for every investor. The value of securities may fluctuate and as a result, clients may lose more than their original investment. Past performance does not guarantee future results.
