Broadcom, Verizon reject tokenized trading of shares on OKXICE

Nine US-listed companies have objected to tokenized versions of their shares trading on OKXICE, a venue backed by OKX and the parent of the New York Stock Exchange. The objections went public on October 15. Broadcom and Verizon are among them.

The names come from a public notice OKXICE posted, first reported by The Block. The venture filed to launch the trading venue on October 4, and these objections are the first public sign of how listed companies are responding. Alongside Broadcom (AVGO) and Verizon (VZ), the list runs through CoreWeave (CRWV), UnitedHealth Group (UNH), Rocket Lab (RKLB), AppLovin (APP), Applied Digital (APLD), Applied Optoelectronics (AAOI) and Cerebras Systems (CBRS). No reasons given.

How a company blocks a tokenized version of its stock

That power comes from an SEC order issued on September 17. It lets certain venues trade tokenized versions of US-listed stocks for five years without registering as a stock exchange. Regulators call it the innovation exemption.

When a third party, not the company itself, wants to tokenize a stock, the venue must give the company written notice at least 30 days before trading starts. The company then has 30 calendar days to object in writing. Silence counts as a yes. A timely objection keeps the token off that venue, and the venue must make the objection public within five business days.

An objection is narrower than it sounds. Not a ban. It applies only to the venue that sent the notice, so a company that wants to stay off every platform has to answer each one in turn. It does not stop anyone from tokenizing the stock elsewhere, including on offshore venues the SEC order does not reach.

Why some companies are saying no

Most of the nine have not explained themselves. One did. A spokeswoman for Applied Optoelectronics told the Wall Street Journal the chipmaker was unsure how tokenization would affect its share price, liquidity and volatility, and worried that investors might confuse the tokens for something the company itself had endorsed. She said there was no clear benefit to the firm or its shareholders that justified the uncertainty. The volatility point has some basis: an IMF study published on October 11 found tokenized stocks trading about 1.5 times more volatile than the shares behind them.

Nasdaq went further. In an FAQ on its website, the exchange said it will opt out of having its own shares tokenized under the SEC framework. A Nasdaq spokesperson told the Journal it did not want its stock on a venue that fails to show the best prices in real time or report to the consolidated tape. Nasdaq says it still supports tokenization in principle.

What OKXICE still plans to launch

OKXICE is a 50-50 joint venture of the crypto exchange OKX and Intercontinental Exchange, which owns the NYSE. It formed in June. Andrew Cuomo, the former New York governor, is co-chair. Its October 4 notice named more than 60 US stocks it wanted to offer.

Eight of the nine objectors were on that list. Cerebras was not, which means it moved before OKXICE had even proposed its stock. The venue says it still plans to open trading for dozens of large companies, among them Nvidia, Apple, Microsoft, Amazon, Tesla, JPMorgan Chase and Walmart. None of those seven had objected as of the notice.

Cuomo described the platform as "a first step toward tokenizing securities" and said he expects companies to be wary at the start. Under the plan, each tokenized stock would trade in permissioned liquidity pools on X Layer, a blockchain network tied to OKX, paired with one of three dollar stablecoins: USDC, USDG or Tether's USDT. Traders would need identity and sanctions checks and a non-transferable token to get in.

What to watch

OKXICE has not set a launch date, and it still needs broker-dealer and other registrations before any token changes hands. The SEC capped the exemption as well: a first-tier venue can list up to 75 stocks and trade no more than 0.25% of a stock's average daily volume. More objections may come as other firms work through their 30-day windows. Whether a real market forms around the stocks people can trade, rather than the household names that said no, is the open question.