The digital exchange DX. Exchange is opening next week and will enable investors to trade with Nasdaq listed companies. The exchange will let its investors indirectly purchase company shares through their token-based platform.

Digital exchange meets Nasdaq

DX. Exchange, based in Estonia, announced on Twitter that they would launch its new trading platform on January 7th. The platform will allow its clients to purchase cryptocurrency tokens that representing shares in different Nasdaq-listed companies. The user can buy the tokens with selected cryptocurrencies and fiat-money.

The Exchange has its offices in Estonia and Israel and will start to offer 10 Nasdaq-listed Companies. They have plans to expand to the New York Stock Exchange as well as in Tokyo and Hong Kong. One regular share backs every digital security. Every investor will, therefore, be entitled to the same cash dividends, even though the companies themselves aren’t involved, Bloomberg reports.

DX. Exchange will offer digital tokens, and their partner, MarketPlace Securities LTD (MPS) will hold the corresponding amount of shares. The exchange’s virtual stock offering will provide a test of investor appetite for products that seek to improve upon mainstream financial markets by using technology from the world of cryptocurrencies.

At launch, MPS said it would purchase shares in AlphaBet, Apple, Amazon.com, Facebook, Microsoft Corporation, Tesla, Netflix, Baidu, Intel Corporation and Nvidia.

What is the advantage of trading stocks on a digital exchange

The company will use Nasdaq’s matching engine to facilitate the trading of digital securities, as well as protect against market manipulation. DX. Exchange customers will not be purchasing ownership of shares directly, but rather, will purchase tokens which represent shares in a company, COO Amedeo Moscato told CoinDesk.

“Henceforth, when they become a token holder, they own stocks or portions of the company’s stock. The tokens are backed 1:1 to the real-world stocks. That makes them entitled to the same cash dividends that the stocks are worth,” he explained.

The advantage of digital trading over traditional shares because investors can trade the shares even after traditional market hours. Traders can even choose to buy fractions of a share. They could also give foreign investors the ability to buy and sell U.S. shares they might otherwise struggle to access.

Even though U.S. regulators oversee trading of DX’s initial roster of stocks, Chief Executive Officer Daniel Skowronski said he doesn’t need permission from the Americans to offer this service because DX doesn’t operate there.

“We saw a huge market opportunity in tokenising existing securities,” the CEO said by email. “We believe that this is the beginning of the traditional market’s merge with blockchain technology. It is going to open a whole new world of trading securities old and new alike.”

The security token is a hot topic at the moment, but traditional tokenizing access is another factor that could be a driver for mainstream adoption.

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