Ondo Finance Calls on SEC to Delay or Deny Nasdaq's Tokenized Security Trading Proposal

On October 18th, Ondo Finance made a request to the U.S. Securities and Exchange Commission (SEC) to either delay or reject Nasdaq's proposal regarding the trading of tokenized securities. The reason given was that the exchange had failed to adequately explain the specific operation mechanism of its post-trade settlement system. The company cautioned that this plan might give existing market participants an unfair advantage. In its letter to the SEC, Ondo pointed out that without public information on how the Depository Trust Company (DTC) would manage the blockchain-based settlement process, regulators and investors would not be able to conduct a thorough evaluation of the proposal. As the core securities depository in the United States, the DTC plays a crucial role in the clearing and settlement process. "Nasdaq's citation of non-public information indicates unequal access to information, depriving other companies of the chance for a fair review," Ondo stated in the letter. While expressing support for Nasdaq's overall direction in promoting the tokenization transformation, Ondo emphasized that the process lacked "open collaboration and transparent standards." Nasdaq submitted the proposal to the SEC on September 8th, aiming to amend the rules to enable the trading of tokenized stocks, which are essentially traditional stocks represented digitally on a blockchain. The proposal was published in the Federal Register on September 22nd, initiating a 45-day review period by the SEC, which can be extended until the end of December. If approved, tokenized stocks will trade simultaneously with traditional stocks and settle through DTC's upcoming blockchain system. Due to Nasdaq's lack of public disclosure on how the DTC system would handle key processes such as reconciliation, record-keeping, and risk management, Ondo has called for increased transparency before approval is granted.