IMF finds tokenized equities draw off-hours trades but remain thin

Tokenized equities are attracting activity outside conventional exchange hours, but their markets remain substantially less liquid and more volatile than the securities they track, according to new International Monetary Fund research.

The analysis, published as a chapter of the IMF’s October Global Financial Stability Report, examined five heavily traded tokenized U.S. stock and index products issued by Ondo Finance and xStocks. The sample covered 11 centralized and decentralized venues, 365 trading days and more than 2 million five-minute price-and-volume observations.

The findings matter as exchanges and financial companies expand blockchain-based versions of stocks. They provide evidence that round-the-clock access and fractional trading are being used, while challenging the assumption that putting an asset onchain automatically creates a deep or efficient market.

Off-hours access is a demonstrated use

More than half of the trading activity in the IMF sample occurred outside regular U.S. market hours. About 80% of trades were smaller than one underlying share, which the researchers interpreted as evidence of demand for fractional positions and participation by smaller, retail-oriented traders.

The analyzed products represented approximately $345 million in reported market value as of July 31, or about 15% of the IMF’s estimated $2.3 billion tokenized-equity market. That coverage is meaningful within the sector but too narrow to describe every tokenized stock product or venue.

The IMF also tested whether overnight token prices contained information relevant to conventional markets. For the five sampled products, between 87% and 99% of the overnight tokenized-price movement was reflected in the corresponding traditional instrument during the first five minutes after the U.S. market opened.

That relationship does not prove that tokenized venues caused the opening moves. Both markets may have reacted to the same news. The result instead suggests that the sampled tokens sometimes formed useful prices while conventional exchanges were closed.

Continuous trading complicates the volatility comparison

The IMF found realized volatility for tokenized equities was approximately 1.5 times that of equivalent instruments on traditional venues. Decentralized exchanges recorded the highest volatility and weakest liquidity among the venue types studied.

The measurement has an important limitation. Tokenized venues were observed around the clock, including lower-volume nights and weekends, while the conventional comparison covered U.S. market hours. The IMF calculated median daily realized volatility from five-minute, volume-weighted returns and trimmed extreme observations at the first and 99th percentiles. Continuous trading therefore accounts for part, but not necessarily all, of the measured difference.

Liquidity was evaluated using the price movement associated with a given amount of trading volume. By that measure, conventional markets were the deepest, centralized token venues were materially less liquid and decentralized venues were the least liquid by a wide margin. Higher-volume token venues generally tracked their underlying instruments more closely.

Scale remains the central limitation

The IMF estimated that publicly tracked tokenized real-world assets, excluding stablecoins, repos and private markets, totaled about $65.1 billion on July 31. That estimate multiplies token supply by issuer-reported unit valuations, so it is not a measure of audited assets, trading volume or readily available liquidity.

The report identified legal certainty, regulatory clarity, interoperability and reliable settlement assets as the principal constraints on further growth. It also warned that faster collateral movement, automated liquidations and continuous settlement could transmit stress more quickly if tokenized markets become substantially larger.

For now, the IMF’s conclusion is narrower: systemic risk remains limited because the sector is small. Its empirical results describe an early market concentrated among a few products and platforms, not a settled forecast of how tokenized securities will behave at scale. The full October report is scheduled for release October 13.