DX.Exchange leverages crypto to offer stock trading around the clock

DX.Exchange enables investors “to trade in companies including Apple, Facebook, and Tesla, outside of the US, even when the stock markets are closed,” using cryptocurrencies, Bloomberg Markets reported before launch.

The exchange is now live, the company announced in a tweet.

DX CEO Daniel Skowronski told Bloomberg:

“We saw a huge market opportunity in tokenizing existing securities. We believe that this is the beginning of the traditional market’s merge with blockchain technology. This is going to open a whole new world of trading securities old and new alike.”

According to CCN, a company press release states that DX a EU-regulated exchange powered by Nasdaq’a Matching Engine Technology.

DX will empower traders to buy some of the world’s most valuable stocks in the form of digital tokens alongside cryptocurrencies like Bitcoin and Ethereum — a feat that has until now been out of reach.

The crypto community “has been talking about security tokens for well over a year now without much progress, so we think the impact will be huge,” DX COO Amedeo Moscato told CNBC.

“By tokenizing stocks of some of the biggest publicly-traded companies like Google, Amazon, Facebook and more, we are opening an untapped market of millions of old and new traders around the globe cutting out the middleman.”

CNBC reports that, according to the company, DX digital stocks are derivatives — with the underlying asset being equity of 10 Nasdaq-listed firms — and the DX platform is regulated under the European Union’s Mifid II directive.

Skowronski told Bloomberg that he doesn’t need permission from the Americans to offer this service because DX doesn’t operate there. DX, which which has offices in Estonia and Israel, is licensed by the Estonian Financial Intelligence Unit and authorized to operate in the European Union. Trading is now limited to ten companies listed on Nasdaq, but DX plans to expand to NYSE and stock exchanges in Tokyo and Hong Kong.

Customers in the US will get access to DX in 2019, Skowronski promises in a tweet:

DX offers ERC20 tokens that vrepresent digital stocks, based on actual shares bought and held by partner MPS MarketPlace Securities Ltd. The DX.Exchange website explains:

“MPS MarketPlace Securities, Ltd, under the supervision of the Cyprus Regulator, CySEC, purchases real world stocks, in accordance to token demand in the DX.EXCHANGE platform. They generate smart contracts, ERC20 tokens created on Ethereum’s network to represent those stocks.
The tokens offered for sale are be based on leading public company shares listed on the biggest exchanges like NASDAQ, NYSE, Hong Kong Exchange and Tokyo Stock Exchange. Each Dx.exchange customer, interested in Digital Stocks, is asked to go over an additional small approval form with Term & Conditions, MIFID 2 compliant, where he will need to approve to enter into an agreement with MPS for buy/sell of Digital Stocks. MPS MarketPlace Securities, Ltd is the trust holder of the stocks on behalf of the token holders. Since Digital Stocks are not like CFDs with leverage, there are no carrying costs for the token holders. Each token is backed 1:1 by one share of real stock. These shares are held in a segregated account.”

Killer app?

Digital stocks “could hold advantages over traditional shares because they can be traded even when exchanges are closed, and traders can choose to buy fractions of a share,” notes Bloomberg.

Investors will be able to trade the digital stocks round-the-clock, even after markets close. “The ability to trade around the clock, with a range of currencies, offers investors both convenience and liquidity,” said Dan Doney, co-founder and CEO of fintech firm Securrency, as reported by CNBC.

Most killer apps are very simple innovations that offer very useful options that weren’t available before. Now, for small casual investors, the ability to trade around the clock is not a big deal, but for hyperactive professional investors it IS a very big deal.

Another significant aspect of this development is that DX digital stocks — tokenized equity in a blockchain — can be seen as precursors of Security Token Offerings — aka “compliant ICOs” — that could enable new companies to raise funds.

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