NYSE taps Avalanche for tokenized stock settlement

The New York Stock Exchange plans to use Avalanche technology to record and settle trades on a new tokenized-securities platform, giving the blockchain a role in a proposed market designed to operate around the clock. Ava Labs announced the choice on Nov. 9, saying Avalanche will provide the core ledger for the clearing firm supporting the NYSE-affiliated platform.

The platform still needs regulatory approval. The announcement describes a plan, not a launch date or a live trading service.

What job will Avalanche do on the platform?

Avalanche will provide the ledger that records and settles trades for the platform’s clearing firm, according to Ava Labs’ announcement. Clearing and settlement are the steps that confirm a trade and complete the exchange of assets and money.

The venue is an alternative trading system, or ATS, affiliated with the NYSE. It is being developed for tokenized securities: digital tokens that represent financial assets such as shares. The planned service aims to allow subscribers to trade, clear and settle at any time, subject to regulatory approvals.

Will every tokenized stock use Avalanche?

No. The platform is designed to support equities listed on different blockchains, while Avalanche supplies the ledger that records and settles trades. NYSE Head of Digital Issuance Dennis Lee said in the release that the settlement ledger must be fast and reliable, keep costs predictable and let the platform control who can participate.

CoinDesk reported that the NYSE plans to run a custom blockchain built with Avalanche technology, rather than settle trades on Avalanche’s public network. John Nahas, Ava Labs’ chief business officer, told CoinDesk that the exchange and Ava Labs had spent more than a year reviewing the technology and business case. The arrangement would let the venue use Avalanche’s technology while tailoring access and operations to its needs.

When could the venue start trading?

The announcement gives no launch date. It says the platform is subject to regulatory approvals and is designed for 24/7 trading and settlement. That means the NYSE’s selection sets out the planned technology for the venue, but does not confirm when customers will be able to use it.

The choice also does not mean all trading activity will run on one blockchain: the platform is intended to support securities listed across several networks, with Avalanche handling its core settlement ledger, according to CoinDesk’s report.

References

• Ava Labs’ announcement — prnewswire.com
• CoinDesk’s report — coindesk.com