IMF Finds Majority of Tokenized US Equity Trades Occur Outside Regular US Market Hours

More than half of sampled tokenized U.S. stock trades take place outside Wall Street’s normal operating hours, according to a new International Monetary Fund (IMF) analysis.

The IMF’s October Global Financial Stability Report also revealed that roughly 80 % of tokenized equity transactions involve less than one share, underscoring demand for fractional ownership and continuous access to U.S. securities.

However, the study showed that tokenized equities exhibit about 50 % higher realized volatility than their conventional counterparts and suffer from markedly weaker liquidity across fragmented trading venues.

These insights emerge as exchanges and financial institutions accelerate the integration of U.S. equities onto blockchain infrastructure, potentially reshaping traditional market hours and settlement processes.

Tokenized stock prices reflect overnight market activity

The IMF evaluated five of the most actively traded tokenized U.S. equity products issued by Ondo and xStocks, covering exposure to the S&P 500, Nasdaq, Tesla, Alphabet and Nvidia.

The analysis spanned 11 centralized and decentralized trading venues, incorporating over 2 million five‑minute price and volume observations collected across 365 trading days.

The sampled assets represented approximately $345 million in market value, or about 15 % of the $2.3 billion tokenized equity market as of July 31.

Trading patterns indicated that investors are leveraging features unavailable during conventional U.S. stock‑market sessions.

Over half of the trading volume occurred outside the regular 9:30 a.m.–4:00 p.m. Eastern session, including overnight and weekend periods.

The IMF attributed this activity to demand from investors in different time zones and those seeking to react to market developments without waiting for U.S. exchanges to reopen.

The prevalence of sub‑share transactions also points to a retail‑oriented market, though the researchers noted that conclusions about participant types are drawn from trade sizes rather than direct identification.

Significantly, the study found that overnight tokenized‑stock prices contain information that later appears in conventional equity markets.

Using data from centralized exchanges, IMF researchers compared overnight tokenized price movements with the performance of the underlying securities during the first five minutes of the subsequent U.S. trading session.

The estimated pass‑through ranged from 87 % to 99 %, indicating a strong relationship between overnight tokenized returns and subsequent price adjustments in traditional markets.

These findings suggest that tokenized venues can convey information while conventional exchanges are closed, though the analysis does not prove that on‑chain trading drives the corresponding price movements.

Higher volatility threatens tokenized stocks’ expansion

The surge in after‑hours trading highlights notable differences in market quality.

The IMF determined that traditional exchanges remain substantially more liquid than tokenized platforms, with centralized crypto venues outperforming decentralized exchanges.

On decentralized platforms, relatively small trades can cause outsized price swings because of limited market depth and scarce market‑making activity.

Realized volatility across tokenized equities was about 1.5 times higher than that of their traditional equivalents, with decentralized venues experiencing even greater fluctuations.

This disparity partly reflects differing trading windows, as tokenized products trade continuously while traditional market metrics cover regular U.S. hours.

Nevertheless, tokenized prices generally tracked their underlying securities during regular trading sessions. Decentralized venues, however, displayed wider and more frequent price deviations, especially when trading volumes were low.

These conditions could hinder broader adoption beyond the currently modest tokenized equity market.

The IMF estimated that public tokenized real‑world assets, excluding repurchase agreements and stablecoins, reached roughly $65 billion by July, compared with about $300 trillion in traditional capital‑market assets.

While systemic risks remain limited at present adoption levels, the Fund warned that expanded continuous trading and automated settlement could amplify market stress.

Automated collateral management, for instance, could trigger margin calls and forced liquidations outside normal trading hours, intensifying selling pressure when liquidity is already thin.

Key constraints on further growth identified by the IMF include legal certainty, regulatory clarity, interoperability between trading networks, and reliable settlement assets.

Uncertainties also persist regarding the rights attached to tokenized securities, particularly whether holders obtain direct ownership of underlying shares or merely contractual exposure to price movements.

To mitigate emerging risks, the IMF called for circuit breakers, trading halts, and liquidity safeguards tailored to continuous markets, along with enhanced monitoring of linkages between tokenized and traditional finance.

Regulators should also evaluate whether existing investor protections function effectively during weekends and overnight trading, when automated liquidations may occur in the absence of the liquidity typically available during Wall Street’s regular session.

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