Tokenised securities are opening up new possibilities for price discovery beyond the trading hours of traditional financial markets. New research from the International Monetary Fund (IMF) found that more than half of trading in tokenised equities takes place outside regular US market hours. Not only that, but between 87 and 99 percent of overnight price movements in these tokens are reflected in their conventional counterparts the following day within the first five minutes of trading.
The findings come as major traditional exchanges look to extend their trading hours. Nasdaq, NYSE Arca and Cboe have all received regulatory approval to introduce 23-hour trading in US equities, with Nasdaq and Cboe targeting launches for December 2026. All three, however, will continue to close over weekends.
A significant attraction of tokenised securities is their potential to trade around the clock, allowing investors to respond to developments when conventional exchanges are closed. Yet the jury is still out on whether these new tokenised markets are influencing conventional equity prices or simply responding to the same information.
The IMF acknowledges their benefits in terms of price discovery but also raises concerns about financial stability as these markets grow, particularly as they become more closely integrated with the traditional financial system.
Price Discovery in an Always-On Market
In its analysis, the IMF tracked five of the most liquid tokens, following the S&P 500, Nasdaq 100, Tesla, Alphabet and Nvidia, across 11 venues over 365 trading days. It examined the price movement of each token from the previous day’s close until just before the next market opening and measured how much of that movement was reflected in the underlying security during its first five minutes of trading.
The results showed a strong relationship between overnight movements in tokenised equities and the prices of their conventional counterparts when trading resumed, suggesting that tokenised markets can provide useful price signals outside traditional market hours.
However, the IMF also identified significant weaknesses. Realised volatility in tokenised equities was “approximately 1.5 times higher” than in conventional shares, while the tokens were “considerably less liquid than traditional markets”, meaning a given amount of buying or selling moved their prices further. Decentralised exchanges, where trading is executed through smart contracts, were “the least liquid by a wide margin”, while “low-volume venues have substantially larger pricing errors”.
These findings help explain the IMF’s concerns about how risks might develop as tokenised markets grow. In particular, the Fund warns that continuous trading and automated liquidations could amplify volatility in times of stress. In response, it recommends adapting traditional safeguards, including “circuit breakers, trading halts” and other measures that pause trading when prices move too far too quickly. It also calls for “intervention tools adapted to always-on financial markets”, while urging a “technology-neutral approach that removes unnecessary constraints to tokenization.”
The difficulty is that restrictions intended to contain volatility can also interfere with price discovery. A circuit breaker, for example, prevents investors from reacting to news and delays the market’s ability to find an effective clearing price until trading resumes.
Wall Street’s Competing Approaches
Nasdaq wants to bring the benefits of tokenisation, including potentially faster settlement, to its customers while keeping trading within its established market infrastructure. In March, the SEC approved its plan to trade tokenised shares on its own order book, under the same ticker and with the same priority as conventional shares. Those tokens may trade during every Nasdaq session, which from December is expected to mean nearly 23 hours a day, five days a week. DTCC expects to launch its tokenisation service this month.
Moving to fully 24/7 trading, however, presents challenges beyond the technology itself. At TOKEN2049 Singapore 2026, panelists argued that the biggest barrier is operational. While systems can be reconfigured to accommodate continuous trading and settlement, the human and process layers are far harder to adapt. Firms must provide legal, risk and compliance coverage over weekends, an operational burden described as “underestimated”.
Another concern is the potential liquidity fragmentation when securities trade across multiple venues. In a September factsheet, Nasdaq warned of “a shadow market for equity securities that can become disconnected from the broader market”, arguing that “experimentation should not fragment liquidity.”
Intercontinental Exchange, the parent of the New York Stock Exchange, has entered a partnership to offer tokenised US stock trading around the clock through permissioned liquidity pools on a public blockchain, pairing tokens with stablecoins, including USDt.
The proposal has already met resistance from some listed companies. By 19 October, 16 companies, including Microsoft, Alphabet, Broadcom and Verizon, had formally objected to third-party tokenised versions of their shares, exercising rights granted under the SEC’s new innovation exemption.
While Nasdaq is seeking to integrate tokenisation into its established trading infrastructure, other major financial institutions are backing new venues designed to operate around the clock. Both approaches face questions about liquidity, oversight and the operational support needed for continuous markets.
The Case for Continuous Trading
Despite the IMF’s concerns, the case for continuous price discovery remains compelling, particularly as financial markets become increasingly global.
“Today, critical business and economic events are not confined to traditional trading hours,” SEC Chair Paul Atkins told a roundtable on 24-hour trading in September. “Indeed, markets benefit when price discovery is not paused or distorted during periods of volatility.”
Jesse Knutson, Head of Operations at Bitfinex Securities, saw the same pressure as an equities trader in Taiwan, where investors rushed to sell stocks nearing their daily price limits before they could be locked in: “Preventing trading does not necessarily prevent risk. It can concentrate activity into the moment when markets reopen.”
Much of the Fund’s caution is answered by its own findings. The report attributes the thin trading mainly to the markets’ small size, identifying a trap “whereby low liquidity discourages participation by the very investors who could help deepen markets.”
Greater participation could help deepen liquidity and improve pricing. Broader financial-stability risks will still need to be managed as tokenisation grows, though restricting — and interrupting — trading hours is unlikely to be the answer.
For an investor in Hong Kong or Singapore, Wall Street’s regular session runs from late evening into the early hours. The ability to trade around the clock could allow more investors to respond to developments and participate in price discovery without being constrained by US market hours.
Jamie Selway, director of the SEC’s Division of Trading and Markets, predicts that “markets will soon be 23-by-5 – then likely 24-by-7 not long thereafter”. Where that capital pools, and whether anyone can impose constraints on it, remain open questions.
From December, the overnight gap the IMF measured will largely close as exchanges trade through the night. The weekend will remain, for now at least, the one window that belongs to tokenised markets alone.
