Tokenized stocks help partially cut the stock exchange out pulling liquidity away from the exchange. One of the reasons exchanges are suddenly interested in longer hours.
Platforms like Securitize and Robinhood are actively exploring or offering tokenized equities, with Ethereum serving as a primary blockchain due to its robust smart contract capabilities and liquidity
Are exchanges facing risks to their bottom line all else being equal?
Yes, less transactions, less revenue
No, more overall activity on exchanges thanks to less transaction costs off-exchange
So if you track the money as of today, Blue Ocean ATS (along with others ATSs) now handles some of the token trades for Robinhoodâat least during off hours. I cannot confirm whether Robinhood uses Blue Ocean ATS for any trades while the market is open or not.
Blue Ocean ATS still has to make some trades through exchanges. Blue Ocean ATS has a âvaultâ of real stocks as collateral for the tokens. This âvaultâ is actually something like: real shares are held as collateral somewhere along the chain consistent with SEC or other International rules and what happens exactly is not public). If Robinhood member A wants to sell 100 shares and Robin Hood B wants to buy 100 shares that can be handled internally without involving the exchanges. The exchanges lose out here.
But if both Robinhood members want to sell 100 shares, Blue Ocean ATS will honor that but it will have 200 shares in its vault with no token holder. There is risk in holding those shares. They would generally sell those 200 shares through the exchanges. So there will always be some exchange activity.
So there will still be trading through the exchange, but some exchange of stocks between Robinhood members will go to Blue Ocean ATS.
That is what is looks like to me with very limited research so I voted yes (decrease revenue for the exchanges with Blue Ocean ATS benefiting in Robinhoodâs case). But maybe 60% confidence there is not something important that I missed.