Is there a risk that a tokenised stock depegs from the underlying stock’s price?

Yes. Although tokenised stocks are designed to mirror the price of real-world stocks, there are certain scenarios where temporary price deviations (depegging) may occur.

  • Low liquidity: If there is insufficient trading volume or liquidity for a specific xStock, the price may temporarily diverge from its real-world counterpart.

  • Market disruptions or stock trading suspensions: If the underlying stock is halted or suspended on traditional exchanges, tokenised stocks may still be traded, which can lead to price discrepancies due to the lack of a reliable reference price.

  • Custody or collateralisation failure: If the token is asset-backed but the custodian or collateralisation support mechanism fails to properly maintain the required backing (e.g., due to technical, operational, or legal issues), the peg may be lost.

  • Extreme market conditions: Black swan events, major geopolitical shocks, or market crashes may cause rapid price movements that challenge the peg’s stability.

  • Changes in product structure or pricing model: The issuer may adjust how tokenised stocks are priced or managed (e.g., temporary suspension, switching from full to partial asset backing), which could affect price tracking accuracy.