The New York Stock Exchange (NYSE) has spent roughly a year testing Avalanche technology and working with Ava Labs as it explores blockchain infrastructure for its planned tokenized-securities platform.
Ava Labs President Charley Cooper disclosed the testing on September 18, saying the work involved both the technical performance of Avalanche and the economics of a potential project.
The disclosure provides a closer look at the blockchain technology being considered as NYSE develops plans to bring tokenized securities to its market. However, neither the NYSE nor its parent company, Intercontinental Exchange (ICE), has confirmed Avalanche as the platform that will ultimately be used.
Avalanche Under Evaluation
The evaluation has reportedly involved connecting Avalanche technology with exchange systems and assessing how it could support NYSE’s proposed blockchain-based market infrastructure.
The testing has covered both technical and commercial considerations, although the companies have not disclosed specific performance results, commercial terms or a timeline for selecting an infrastructure provider.
ICE executive Michael Blaugrund has previously indicated that the company was closely engaged with Avalanche during its evaluation of blockchain technology.
That engagement does not mean Avalanche has been selected. ICE and NYSE have yet to announce a final blockchain infrastructure provider, and the testing described so far remains separate from a live production deployment.
NYSE Plans Blockchain-Based Settlement
NYSE has been developing a platform that could allow tokenized securities to be traded and settled on-chain, subject to regulatory approval.
The proposed system is designed to support trading around the clock, potentially allowing investors to access tokenized versions of securities outside traditional stock-market hours. The platform could also support the use of tokenized collateral.
Under the proposed architecture, NYSE’s Pillar technology would handle trade matching, while blockchain infrastructure would provide the settlement layer. Stablecoins could be used to fund transactions.
This means the blockchain component would represent only one part of a broader trading system.
The Avalanche evaluation is therefore focused on a specific layer of the proposed infrastructure rather than the entire trading platform.
Other Infrastructure Partners Involved
NYSE’s tokenization project also involves other companies working on different parts of the proposed system.
ICE announced in August that it had entered into a memorandum of understanding with tZERO, which would act as a design partner for digital transfer-agent and broker-dealer infrastructure supporting the planned NYSE-affiliated tokenized-securities platform.
The arrangement illustrates the number of separate components that would be required to operate a tokenized securities market.
A blockchain network would provide the settlement infrastructure, while other systems and service providers would be responsible for functions such as trade matching, custody, transfer-agent services and brokerage infrastructure.
The tZERO partnership does not identify the company as NYSE’s blockchain provider.
Tokenized Stocks Still Require Regulatory Approval
NYSE has also outlined the types of securities that could eventually be available in tokenized form.
An April regulatory filing proposed allowing certain eligible securities, including stocks in the Russell 1000 and major index-based exchange-traded funds, to trade in tokenized form alongside their traditional counterparts.
Under the proposal, tokenized versions would retain the same economic rights and privileges as their conventional versions.
However, the initiative remains subject to regulatory approval and other market-infrastructure requirements.
The Depository Trust Company would also play a role in the proposed framework, meaning the eventual launch would depend on coordination among NYSE, regulators, clearing and settlement infrastructure, technology providers and other market participants.
Avalanche Decision Has Not Been Made
NYSE’s work with Ava Labs demonstrates that Avalanche has been seriously evaluated as part of the exchange’s blockchain strategy, but it does not confirm that the network will ultimately power the platform.
The exchange still has to determine how its technology, regulatory requirements and market infrastructure will fit together before tokenized securities can become part of its broader trading operations.
For now, the Avalanche testing represents an important part of NYSE’s exploration of blockchain-based settlement, while the final technology choice and launch timeline remain undecided.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, investment, financial or other professional advice.
