The International Monetary Fund's October Global Financial Stability Report found that more than half of sampled tokenized US stock trading volume occurred outside regular market hours. The activity occurred outside the 9:30 a.m. to 4 p.m. Eastern session, including overnight and weekend periods. The IMF found that approximately 80% of tokenized equity transactions involved less than one share. The IMF said the trading activity suggested demand from investors in different time zones and investors seeking to respond before US exchanges reopen. Small transaction sizes also suggested a retail-oriented market, although researchers inferred participation from trade sizes rather than directly identifying individual investors.
The IMF examined five of the most actively traded tokenized US equity products issued by Ondo and xStocks. The products covered exposure to the S&P 500, Nasdaq, Tesla, Alphabet and Nvidia. The analysis covered 11 centralized and decentralized trading venues. Researchers collected more than 2 million five-minute price and trading-volume observations over 365 trading days. The sampled products represented approximately $345 million in market value, or 15% of the $2.3 billion tokenized equity market as of July 31.
The study found that overnight tokenized-stock prices contained information subsequently reflected in conventional equity markets. IMF researchers used centralized-exchange data to compare overnight tokenized price movements with underlying securities' performance during the next US trading session's first five minutes. The estimated pass-through ranged from 87% to 99%, indicating a strong relationship between overnight tokenized returns and subsequent traditional-market price adjustments. The findings suggest tokenized venues can reflect information while conventional exchanges are closed, but the analysis does not establish that on-chain trading causes corresponding price movements. Both markets may respond to the same developments, with conventional shares adjusting rapidly when trading resumes.
The IMF found that traditional exchanges remained substantially more liquid than tokenized trading platforms. Centralized crypto venues performed better than decentralized exchanges. Relatively small transactions on decentralized platforms could produce disproportionately large price movements because of limited market depth and market-making activity. The study found realized volatility across tokenized equities was about 1.5 times, or roughly 50% higher than, volatility in traditional equivalents. Realized volatility rose further on decentralized venues. The comparison partly reflects different trading windows: tokenized products trade continuously, while the traditional-market measure covers regular US hours.
Tokenized prices generally tracked underlying securities during regular trading sessions. However, decentralized venues experienced wider and more frequent price deviations, especially when trading volumes were low. Higher volatility and weaker liquidity could complicate broader adoption beyond the relatively small market currently served by tokenized equities. Exchanges and financial institutions are expanding efforts to bring US equities onto blockchain infrastructure, potentially challenging conventional market hours and settlement arrangements.
The IMF estimated that public tokenized real-world assets, excluding repurchase agreements and stablecoins, reached approximately $65 billion by July. Traditional capital-market assets totaled roughly $300 trillion. The IMF said systemic risks remain limited at current adoption levels. However, the IMF said broader use of continuous trading and automated settlement could accelerate market stress. Automated collateral management could trigger margin calls and forced liquidations outside conventional trading hours, potentially amplifying selling pressure when liquidity is already thin.
The IMF identified legal certainty, regulatory clarity, interoperability between trading networks and reliable settlement assets as major constraints on further growth. Questions remain about whether tokenized securities give holders direct ownership claims over underlying shares or contractual exposure to share prices. The IMF called for circuit breakers, trading halts and liquidity safeguards adapted to continuous markets. The IMF also called for stronger monitoring of connections between tokenized and traditional finance. Regulators must assess whether existing protections can operate during weekends and overnight trading, when automated liquidations may occur without normal regular-session liquidity.
IMF Report Reveals Over Half of Tokenized US Stock Trading Happens Outside Regular Market Hours
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Summary
The IMF’s October Global Financial Stability Report shows over half of tokenized US stock trading volume occurs outside regular market hours. A daily market report by FLASH AI reveals 80% of tokenized equity trades involved less than one share, pointing to retail activity. The analysis covered five products from Ondo and xStocks, including Tesla and Nvidia, with over 2 million five-minute data points across 11 venues. Tokenized platforms show activity during market closures, but traditional exchanges remain more liquid. The IMF warned of risks from continuous trading, including margin calls and forced liquidations after hours.
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