The European Union market organizer says that the distinctive symbols associated with the value of stocks can mislead investors because they do not give holders of the same rights of direct shareholders.

Natasha Kazinaf said at a conference in Dubrovnik on Monday that many companies have symbolic shares and derivatives supported by the shares they represent in a private company for private purposes.

“These distinctive tools can always provide access and break, but usually do not grant shareholders’ rights,” she said.

“If it is organized as artificial demands instead of direct ownership, this may create a specific danger to the investor’s misunderstanding and emphasizes the need for communication and clear guarantee.”

In the late last month, the World Exchange Federation urged the global securities organizers, including ESMA, to make symbolic discounts, on the pretext that they lack the protection of integrated investors in the actual assets they follow.

Distinctive stocks are still “largely unprocessed”

Cazenave said that the European Union “played a pioneering role” in symbolic assets, as the initiatives and pilots returned until 2019 through the investment bank in the bloc and the Ministry of Finance in Germany.

She added that the demonstrations showed that the distinctive symbol, as the assets are represented on Blockchain, can “expand access scope, low issuance costs, and secondary trading support faster and more efficient.”

“Despite these promising signs, most of the distinctive symbol initiatives remain small and largely liquid,” said Cazenave. “Tools are usually released through special places and maturity are held. Betical operation is limited.”

Esma is keen on new technology, but it urges guarantees

Cazenave said ESMA “is keen to continue to explore the new technologies that it might bring”, but the priority was to develop in a way that protects investors and financial stability.

She added that the distinctive symbol can improve “intercourse, transparency and border efficiency” while reducing costs-if implemented “with the correct legal framework.”

The European Union has opened experimental Blockchain technology, allowing companies to test products with exemptions, which Cazenave, along with the lessons learned from the European Union markets in organizing encrypted assets (MICA), said that would help in how to organize symbolic assets.

Robinhood, Coinbase dives into symbolic stocks

The US Robinhood Markets trading platform launched symbolic shares of the European Union in June, which faced auditing from some representative companies and member states of the European Union.

Crypto Excination Kaken, based in the United States, launched a symbolic offer in June, which it did not provide in the United States or the European Union, while the competing Coinbase Global sought the approval of the organizers to launch its special offers.

magazine: The distinctive shares of Robinhood raised the legal tube nest