Recently, the SEC’s Division of Trading and Markets – which is the office that regulates TSVs – issued these four FAQs, which address:
- What should be in the “Public Notice” that a TSV posts on its site
- Whether a TSV can identify companies it hopes to issue tokenized stock for ahead of the 30-day objection period running (answer is “yes”)
- This list of TSVs so far (there are three right now)
- Who can be contacted at the SEC for questions about TSVs
In addition, Nasdaq issued these FAQs – well, they’re called FAQs but they’re not in that format – that summarizes part of the SEC’s Order as well as notes other things including:
1. Lack of Interoperability: The SEC’s Innovation Exemption doesn’t require tokens to be interoperable across TSVs.
2. Price Transparency Concerns: Nasdaq warns that the absence of price transparency requirements for TSVs could create a “shadow market” for equity securities, with pricing and price transparency disconnected from the broader market.
3. Impaired Company Oversight: Nasdaq argues that this lack of transparency could impair a company’s ability to maintain a complete, accurate and timely understanding of the pricing and trading activity of its securities.
4. Reputational Risks: Investors who experience poor outcomes trading on TSVs may blame the company, even though the company has no control over those trading activities.
5. Nasdaq Intends to Object Itself: Nasdaq notes that it intends to opt out – and timely object – to any notice from a TSV for its own publicly traded shares.
Authored by
Broc Romanek