Why Stock Tokens Can Diverge From Share Prices
Edited by Steinar Vigdel Kolnes, Editor, Oslo
A token linked to a stock may trade at a different price because its market, trading hours and redemption terms can differ from those of the underlying share.
Tokenized stocks aim to track company shares, but their prices do not necessarily match exchange quotes. The token trades in its own market, where buying and selling pressure can produce a premium or discount to the underlying stock.
Trading hours and liquidity can contribute to that gap. Where tokens remain available outside stock exchange hours, their prices may respond to news while the share’s last quoted price stays unchanged. Limited trading depth can also widen price differences.
The product’s structure matters as well. Ownership rights, backing arrangements and redemption terms vary, and a token does not automatically carry the same rights as a share. Fees or restrictions on converting tokens into their underlying value can make price gaps harder for traders to close.
Source: The Defiant
