SEC Names Three Operators Notifying It of Tokenized Stock Venue Plans

The Securities and Exchange Commission said on Wednesday that three companies have notified it of plans to operate tokenized securities venues under the agency's five-year innovation exemption: Tokenized Stock Venue operator TSV LLC, the OKX and Intercontinental Exchange venture OKXICE, and Kephas Corp, the Delaware subsidiary of Perpetuals.com that does business as Perpetuals.com, according to a Bitcoin Magazine report of the announcement. The SEC stressed that appearing on the list does not mean a firm meets all conditions of the exemption.

Two of the three notified operators have already published their public notices. TSV LLC filed its notice on Sept. 23 and revised it on Oct. 19, the company's public notice states. TSV LLC is a Puerto Rico limited liability company owned in equal shares by Ali Abrar and Ryan Trinkle, both residents of Puerto Rico, and plans to run permissioned automated market maker pools on the Canton Network. The notice says the company has not commenced operations and will not start earlier than the 31st calendar day after publication. At commencement it expects to pair tokenized stocks with USDC issued by Circle and SBC issued by Brale, both on Canton, and describes a baseline total swap fee of 0.30 percent, with 0.20 percent ordinarily going to liquidity providers.

The TSV notice names the operators and infrastructure behind the plan. TSV LLC licenses the Tradecraft automated market maker software from Obsidian Software LLC, an affiliate, and the notice says Tradecraft has previously been through an independent security review by Halborn. Participant identity checks will be performed by the issuer's transfer agent, which also maintains the register for the tokenized shares. IntellectEU is expected to provide Canton participant-node hosting, Amazon Web Services is expected to supply cloud infrastructure for offchain systems, and Alpaca provides consolidated market data. Trading access is permissioned: only Canton parties approved after identity and sanctions checks may interact with a liquidity pool, the notice says. Neither TSV LLC nor its affiliates will run proprietary trading or provide proprietary liquidity at commencement.

Coinfomania reported that TSV LLC intends to operate on Canton Network, that OKXICE will launch on X Layer, and that Kephas Corp is set to operate on Kronos X Public. OKXICE is the 50-50 joint venture of OKX and Intercontinental Exchange, the parent of the New York Stock Exchange, and plans to pair stock tokens with stablecoins in permissioned liquidity pools on X Layer, according to a TokenPost report.

Perpetuals.com announced its own plans on Oct. 14 in a press release, saying its Nasdaq-listed parent (ticker PDC) intends to offer tokenized US equities using the exemption for onchain trading of National Market System stocks. The release says the company published a notice of intent to rely on the temporary exemption on or about Oct. 14. Chief executive Patrick Gruhn said the expansion into the United States builds on the team's earlier tokenization work. The company's founding team created regulatory-approved tokenized stocks in 2021 that let platforms including Binance, FTX and Bittrex offer round-the-clock stock trading, the release states. The US move extends an existing European tokenization platform operated through an entity licensed under MiFID II, MiCA, DORA and EMIR, according to the release, and follows an agreement to tokenize more than $300 million in physical commodities.

The SEC issued the exemption in September. The five-year temporary regime lets qualifying venues trade tokenized stocks through automated market makers without registering as exchanges, with operators notifying the agency and publishing a public notice rather than seeking individual approval. A venue must give an issuer at least 30 days' notice before trading its shares when an unaffiliated party creates the tokens, and a timely issuer objection blocks those tokens on that venue.

OKXICE has already drawn objections. TokenPost reported on Oct. 19 that 16 issuers, including Microsoft, Alphabet, Goldman Sachs, Qualcomm, Caterpillar, McDonald's and Western Digital, objected to tokenized versions of their shares trading on the planned venue, after an earlier notice had identified nine companies including Verizon, Broadcom and UnitedHealth. Nasdaq separately plans to opt its own shares out of tokenized securities venues, that report said.

None of the three operators has launched trading. TSV LLC's notice states that no assets are presently available for trading and that no Tokenized NMS Stock is currently listed, with the first public-company name and ticker to be disclosed when the venue goes live.