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Now You Can Buy Tokenized Stocks of Listed US Companies, on FTX

Cryptocurrency exchange FTX has recently ventured into tokenized equity trading by launching tokenized stocks of US public listed companies for trading. FTX, in partnership with the German financial firm CM Equity AG and the Swiss-based Digital Assets AG (DAAG), is now offering ‘fractional stocks’. The concept of fractional stock trading is to enable users to buy less than one share, and is especially useful for high-cost stocks.

FTX has listed several digital currencies and stablecoins to equity trading pairs on the exchange, and around a dozen stock and crypto pairs can now be traded on the FTX platform. It facilitates users to buy fractions of shares of some of the world’s biggest corporate giants – including Apple Inc., Amazon.com Inc., Tesla, Facebook Inc., Netflix Inc., and the SPDR S&P 500 exchange-traded fund. Unlike the traditional equities markets, whose regular operating hours are 9:30 am to 4 pm in the US, tokenized stock trading on FTX will remain open 24/7.

So, What are Tokenized Stocks, and How Did FTX List Them?

Tokenized stocks, also referred to as tokenized equity, are digitized tokens or coins that represent equity shares in a particular company. Tokenized stocks are a fairly convenient way for businesses to raise capital by issuing shares in the form of digital assets, much like cryptocurrency tokens.

FTX lists tokens on the securities by itself. All the spot tokens are backed by shares of various stocks custodied by CM-Equity; users who trade tokenized stocks on FTX are required to be clients of CM-Equity.

And while through FTX, users can buy or sell tokenized equities, if they are looking to redeem a token for its underlying stock, FTX users would have to go through CM-Equity as well. The very same entity also conducts KYC and compliance on all participating customers and trades.

What You Should Know About Tokenized Stocks Trading on FTX

To trade tokenized stocks on FTX, a user has to have completed KYC level 2. As with other FTX products, its equity trading won’t be available in any of FTX’s restricted jurisdictions – including the United States, Iran, Syria, and North Korea.

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Tokenized stocks on FTX are spot tokens, just like Bitcoin, Ethereum, etc.  They can be utilized as collateral for futures trading on the exchange, with a collateral weight of 0.85 (total) and 0.80 (initial).

Tokens offered by FTX represent the corporate actions of their underlying equities, including the ones through dividends and stock splits.  So users holding tokenized stocks on FTX are entitled to dividends, etc. of the underlying stock. For the US listed products, the dividends on FTX would be credited to the users’ accounts at around 2 pm Hong Kong Time on the ex-date. 

FTX also lists futures on tokenized stocks – including tokenized futures. Tokenized stock futures on FTX would track the FTX spot markets as their index. They are quite similar to the futures on other FTX products, with the following conditions: 

  1. The futures would not have any adjustments in the case of an ordinary dividend.
  2. However, for other corporate actions such as stock splits, significant spinoffs, etc., the futures would adjust, either by changing denominators or, in the case of spinoffs,  by turning into a future on the whole basket.
  3. FTX has the ultimate right to determine whether or not there would be any adjustments made to the futures in a specific case.

To trade futures on tokenized stocks on FTX, users have to go through the same KYC procedure as trading the tokenized stocks themselves.

How to Get Started With Trading Tokenized Stocks on FTX

To register for tokenized stocks trading on FTX, you have to start out by completing KYC level 2 on FTX, which can take up to a day. Once you are KYC 2, you can go to your tokenized stocks KYC page to submit your information to CM-Equity, and become one of their customers. 

Following KYC with CM-Equity, you might be required to answer some questions regarding your previous trading experience in order to trade.  More compliance measures might be implemented if deemed necessary by FTX and CM-Equity.

Trading Tokenized Stocks on FTX

As for the actual trading, you can trade tokenized stocks on FTX the same way you trade in other spot markets. Trading fees, API calls, and GUI instructions are all the same. 

FTX Tokenized Stocks Tickrs

Head over to the FTX Tokenized Stocks page, and you can see tokenized stocks for all major US corporations along with their market movements. You can sort the list by volume, by current price of course, and even by name.

FTX Tokenized Stocks Page

Navigate to the individual stock pages by clicking on your preferred company, and much like any other crypto trading platform, you get access to the orderbook, a fairly competent charting UI, and the option to place your orders. 

Sign Up To FTX by clicking on the Button below to Get A 5% Discount on all Trades

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In this example below, we see Netflix trading at around $483 with fairly high liquidity. Trades are executing at a fairly high frequency, and as users, we can place several types of customized orders depending on our preferences.

Netflix on FTX

Making the move to offer tokenized stocks, on the part of FTX, is incentivizing the recent amplification of institutional interest within the crypto space. According to Sam Bankman-Fried, the CEO of FTX, these tokens are primarily targeted at investors who find it inconvenient or difficult to access stocks through traditional markets. By giving users access to tokenized stocks, FTX aims to broaden out the scopes of what can be traded.

A Stock Trading Competition is Also Yours To Win

Right now, FTX is also hosting a stock trading competition that will run for the period between November 11, 06:30 am IST and December 25, 06:30 pm IST. The total valuation of FTX’s prize pool for the competition is $500,000.

The topmost prize is a share of BRK.A (Berkshire Hathaway)  worth $343,000, the second prize is a Tesla Model S or an equivalent value of TSLA equity on FTX (worth about $69,420), and the third to tenth prizes are iPhone 12s or the equivalent values of AAPL equity on FTX (worth around $1,200).

There are also additional rewards including lucky draw and influencer prizes. If you’d like to compete, all you’d have to do is complete FTX KYC Level 2 and CM-Equity KYC, and then you can join in at any point of time during the competition! 

You can find out more about FTX’s stock trading competition here

Sign Up To FTX by clicking on the Button below to Get A 5% Discount on all Trades

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