Stock Exchanges Urge Regulators To Crack Down on 'Tokenised Stocks' (yahoo.com) 22
A group representing the world's biggest stock exchanges has called on securities regulators to clamp down on so-called tokenised stocks, arguing that the blockchain-based tokens create new risks for investors and could harm market integrity. From a report:
Crypto exchange Coinbase and broker Robinhood are among those making a push into the nascent sector that could shake up the securities investing landscape. Proponents say tokenised equities can cut trading costs, speed up settlement and facilitate around-the-clock trading. The World Federation of Exchanges (WFE), in a letter sent to three regulatory bodies last Friday, said it was concerned the tokens "mimic" equities without providing the same rights or trading safeguards.
Crypto exchange Coinbase and broker Robinhood are among those making a push into the nascent sector that could shake up the securities investing landscape. Proponents say tokenised equities can cut trading costs, speed up settlement and facilitate around-the-clock trading. The World Federation of Exchanges (WFE), in a letter sent to three regulatory bodies last Friday, said it was concerned the tokens "mimic" equities without providing the same rights or trading safeguards.
Q & A (Score:1)
trading.stockexchange.com.
And Stockexchange seems to belong to Google ...
Re: (Score:2)
tokenized securities are not comparable to mortgage backed securities.
Re:history and mortgage backed securities (Score:5, Interesting)
With a mortgaged-backed security you at least had some claim to the underlining mortgage.
I wouldn't even call them tokenized securities. That's false advertising based on what I just read.
The token represents ownership in the stock but you don't own the stock.
How can you have a representation of your ownership and then not own it?
I'm sure there's some nasty little reasoning behind it and frankly I don't care what it is. This is obviously just another way to launder money and steal money from old people whose brains are getting a little mushy.
If you are somebody with elderly relatives have fun supporting them after they blow their retirement savings on this crap.
Re: history and mortgage backed securities (Score:3)
True that. With these tokens you don't even own a tulip when the rug is pulled.
If we want to compare tokenized securities to the 2007 crash, these tokenized securities sound much more like the over $100 Trillion naked swaps market.
Dr Frank-N-Furter: I ask for nothing.
Riff-Raff: And you shall have it. In abundance!
Re: history and mortgage backed securities (Score:4, Informative)
Re: (Score:2)
Right. Mortgage backed securities are backed by something.
So far all the tokenized "securities" are "hey, give us money, we're going to buy some stocks, and if they go up we might pay you something."
Re: (Score:2)
The World Federation of Exchanges (WFE), in a letter sent to three regulatory bodies last Friday, said it was concerned the tokens "mimic" equities without providing the same rights or trading safeguards.
On the one hand, the tokens not providing rights or safeguards is an obvious feature, just like it is for fintech in general. Exactly the same way how it is a feature of "ride sharing" and pretty much all of techbro business really.
On the other hand, exchanges complain that someone is eating their lunch... Cry me a river.
Re:history and mortgage backed securities (Score:4, Informative)
That arrangement is clean.
The exchanges is the classic middleman. They facilitate an exchange between a buyer and a seller of stocks, for a fairly small fee. The service they provide is convenience. If you want to sell some stock without an exchange, good luck hunting down another individual buyer, negotiating a price, and taking care of the documentation, reporting requirements and paperwork all by yourself.
That's also a very clean, well-defined arrangement.
Tokenized stocks represent a pinky-promise that, if you give Robinhood a thousand dollars, they hand you a thousand "tokens" which represent actual stock shares that Robinhood will absolutely, for sure, for realzies, hand over on demand at some unknown later date which could be tomorrow, or in 2075. Sure. Unless they happen to sell or collateralize the stock themselves and don't actually have it anymore, or the company raids the value of the stock for a dozen other purposes, or a hundred other scenarios where the "tokens" could become suddenly worthless.
That arrangement is a nightmare minefield of unknown risk. The exchanges are absolutely right to call out the concerns. Especially because, nowadays, US government financial regulators have taken the attitude of "shrug do whatever you want as long as the guy at the top gets his cut"
Re: (Score:3)
"Ride sharing" is a taxi service that does not provide worker benefits, nor legal customer protection. It's a scheme to avoid any law and responsibility that applies to a taxi sevice.
Fintech, in the same vein, is a scheme to avoid any law and responsibility that applies to banking and finance.
Robinhood's promise to actually hold my stock is exactly the same as my bank's promise to hold my stock, or my money, or anything. Fractional reserve, baby, and with current reculations, the fraction is defined as basi
Re: (Score:2)
It's basically Itchy and Scratchy Money.
How? (Score:1)
what regulatory vehicle do they hope to use? Coinbase and Robinhood can by stocks, and then sell tokens of them under whatever shrink wrapped license agreement they want.
This is only a risk to the markets if there is a violation of holding the underlying security. Regulators should do what they can to avoid another FTX situation, where FTX sold Bitcoin but held none, and their position, which was effectively short bitcoin, blew up in their face, which is what bitcoin does when entities try to manipulate it.
They are selling a security (Score:1)
Unfortunately the current administration is completely balls to the walls corrupt so no regulatory enforcement is going to happen.
Jesus fucking Christ the crash that's coming is going to be brutal. Even worse if Trump wins a third term...
All Financial Products Regulated (Score:2)
Coinbase and Robinhood can by stocks, and then sell tokens of them under whatever shrink wrapped license agreement they want.
No they cannot. In just about every country on the planet the sale of financial products is strictly regulated in general terms that will include any new ways that technology makes possible. There may be some specific rules tied to specific products that new methods can avoid but any new financial service or product will immediately fall under the purview of a countries financial regulator. If it were not for this then the markets would far fuller of scams and dodgy products than they already are: for ever
Re: (Score:2)
In the UK, you would have to register it as a unit trust, an investment trust, an exchange traded fund, or something along those lines.
People buy those to either let a fund manager pick the stocks for you, or to invest in an index. There is no legal reason why it couldn't be a single stock fund.
Re: (Score:2)
Re:How? (Score:5, Informative)
what regulatory vehicle do they hope to use? Coinbase and Robinhood can by stocks, and then sell tokens of them under whatever shrink wrapped license agreement they want.
This is only a risk to the markets if there is a violation of holding the underlying security. Regulators should do what they can to avoid another FTX situation, where FTX sold Bitcoin but held none, and their position, which was effectively short bitcoin, blew up in their face, which is what bitcoin does when entities try to manipulate it.
My greatest fear is the stock exchanges resistance to tokenization is their realizeation is that their utility may be nearing an end. The leap between actual security and a token of a secuity that is digitally tradable is within grasp once these tokenized markets gather momentum. Regulation for anti-competitive reasons is ill advised.
What exactly are you talking about? You understand that what you're proposing that is somehow novel already exists? It's called an ETF. I buy a share of an ETF, I own a portion of the stocks that the ETF holds. And you know what? I can buy it online. Also it settles near instantly.
Except ETFs are regulated, whereas these tokenized systems, by calling it something else, are not. So by regulating it they're on the same page as literally every other money manager.
Get real. Regulation is not about being anti-competitive. It's about making sure the people buying the tokens understand what they're buying, and I know a lot about securities and see no reason for this tokenization of securities to exist when there are already vehicles for this.
And the rest of us are hoping they crack down... (Score:3)
ha ha (Score:2)
"market integrity" ROFLMAO
Congress insider trading. Bots trading at submilisecond speeds. Pump-and-dumpers.
And, yeah, derivatives made up of tranched derivatives made up of tranched derivatives.
The WFE is right (Score:2)
But the crapto-bros are not rational.