In an Oct. 19 post, Figure co-founder Mike Cagney questioned whether tokens proposed for trading on OKXICE LLC's venue could support leverage or share lending, as a temporary SEC order restricts financing on qualifying platforms.
OKXICE’s Oct. 15 notice describes a venue offering trading at all hours, with every purchase fully funded and no margin or borrowing on the platform. OKXICE and its affiliates would operate the venue but would not issue or tokenize the stocks traded there.
Under the SEC order, a qualifying venue cannot extend credit to buy tokenized stock on its platform. It also cannot borrow securities or nonsecurity crypto assets there, or arrange or permit those assets to be pledged there. The order does not determine which share-lending arrangements may be permitted away from the venue.
The SEC cited the absence of capital and margin requirements for qualifying venues as the reason for its financing limits. Cagney’s questions concern whether tokens would meet investors’ needs for leverage or lending despite those limits.
OKXICE proposes that each token be backed by a share held through a registered broker-dealer. The tokens would carry dividend and voting rights equivalent to those of the underlying shares, according to its notice. The venue would use liquidity pools for trading, and token values could diverge from those of the underlying shares.
OKXICE says those gaps may arise outside the regular hours of the underlying stock’s primary listing exchange, during trading halts or corporate actions, or when a pool has little liquidity. Its notice says requiring full funding may further reduce liquidity, and liquidity providers may incur losses. EconoTimes has previously examined how stock-market hours can complicate round-the-clock token lending.
Nine issuers had objected to unaffiliated tokens tied to their shares as of OKXICE’s Oct. 15 notice. The SEC order requires a 30-calendar-day wait after written notice is received; an issuer may object on or before day 30, preventing that token from trading on that venue under the exemption. The Oct. 15 notice gives no launch date.
