Nasdaq CEO warns against tokenized stock derivatives that obscure market trading

Nasdaq is prioritizing tokenization that brings securities onto blockchain while maintaining direct ownership of the underlying assets, CEO Adena Friedman said, speaking in a recent interview with CNBC’s ‘Squawk Box.’ Friedman identified three approaches to tokenization, including issuing and trading tokenized shares through established market infrastructure, moving share trading outside that system under regulatory exemptions, and issuing stock-backed derivatives. Nasdaq is focused on the first model as it develops an end-to-end approach to tokenized equities, she said. “We are very focused on driving tokenization through the core of markets,” she said. “When an investor is buying a company stock, whether it’s in traditional form or it’s in tokenized form, it’s the same thing. They’re buying, they actually own the stock. They own the company.” Friedman likewise raised concerns that stock-backed tokens and trading outside established market systems could weaken price discovery, fragment liquidity and limit companies’ visibility into trading in their shares. Friedman raised concerns that trading outside the core market system can reduce visibility into quotes and transactions, poten...