Securitize, the company best known for tokenizing BlackRock’s BUIDL money market fund, is gradually announcing the building blocks of its tokenized stock and trading strategy. The latest announcement is the addition of Jump Trading as liquidity provider for its trading venue, the Securitize Markets alternative trading system (ATS), plus a collaboration with Jupiter to provide the DeFi-style user interface to support trading. The SEC recently provided clarity that user interfaces would not be regarded as broker dealers, allowing the likes of Jupiter to partner with a regulated entity like Securitize to provide stock trading to its users.
At a high level, there will be several ways to trade tokenized stocks in the US. It will be possible to trade tokenized stocks alongside conventional ones at the national exchanges Nasdaq and NYSE, but this involves (slow) conventional settlement. To benefit from 24/7 trading and on chain settlement, trading will go through separate ATS venues from the likes of NYSE, Securitize, Bullish, tZERO and others.
A third path is purely onchain trading via automated market makers (AMMs). There’s an expected SEC regulatory exemption from NMS best execution rules for issuer sponsored tokens traded on AMM, with transfer agents playing a critical role here.
Jump provides what it calls a PropAMM which as the name implies is a proprietary AMM, but is very different from a typical AMM. That’s partly because there is a single dedicated liquidity provider (Jump), and the pricing is based on an offchain pricing feed, not just an algorithm (explored below).
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