24X National Exchange files tokenized equity pilot with DTC, SEC oversight
In brief
- 24X filed SR-24X-2026-20 on June 11; SEC notice issued June 16, Federal Register June 22.
- Tokenized securities trade on the same 24X book as traditional shares with identical execution priority and shareholder rights.
- Participants select tokenized settlement at order entry; ineligible members default to traditional form.
The Tokenization Model
The rule change would let eligible 24X members trade certain securities in tokenized form during a Depository Trust Company pilot. The filing frames this not as a workaround around legacy infrastructure but as an evolution within it. The token layer changes how eligible positions can be represented and settled, while the legal identity of the share and the market structure around the trade stay the same.
The proposed structure would allow DTC Eligible Participants to trade tokenized versions of eligible equity securities and exchange-traded products on 24X during the DTC pilot. Trades would settle within the current national market system, using DTC to clear and settle in token form based on instructions selected when orders are entered.
Fungibility and Control
A tokenized security must meet strict conditions to trade alongside its traditional counterpart. It would be tradable on the same 24X book and with the same execution priority as the traditional version only if it is fungible with the traditional share, has the same CUSIP and trading symbol, and affords the same rights and privileges.
Tokenization itself becomes a controlled preference. Eligible participants that want tokenized settlement would select a designated flag at order entry, which may include DTC-required information such as the blockchain and wallet address. If the member is not eligible, the security is not eligible, the blockchain is not compatible, or the wallet is not registered with DTC, the order remains in traditional form.
Precedent and Structure
24X framed the proposal as part of an exchange-led pattern. The filing says it is based on a similar Nasdaq proposal that the SEC already approved. The model keeps the exchange, DTC, participant eligibility, order-entry controls, and shareholder-rights protections in place—tokenization as infrastructure upgrade, not market bypass.
Frequently asked questions
How is this different from decentralized tokenization?
This proposal keeps tokenized securities within the DTC and exchange ecosystem. Trades settle through the traditional national market system, not on external blockchains. Participants must be DTC-eligible, and ineligible members default to traditional settlement. It's an infrastructure upgrade, not a bypass of existing gatekeepers.
What happens if a participant isn't eligible for tokenized settlement?
If the member, security, blockchain, or wallet doesn't meet DTC requirements, the order automatically remains in traditional form. Tokenization is optional at order entry and requires meeting multiple eligibility criteria set by the exchange and DTC.
Will tokenized shares trade differently from regular shares?
No. Tokenized securities must be fungible with their traditional counterparts, share the same CUSIP and trading symbol, and trade on the same order book with identical execution priority. The token format is a settlement mechanism, not a separate asset class.
