SEC targets 20-year-old rule standing between Wall Street and blockchain trading
The SEC has proposed rescinding Rule 611 of Regulation NMS, the trade-through rule that requires stock trades to avoid prices worse than protected quotes elsewhere, and Rule 610(e), which limits locked and crossed quotations. The move could reshape U.S. market structure by reducing NBBO-based routing requirements and shifting emphasis toward best execution. The proposal matters for tokenized equities because automated market makers and other blockchain-based trading systems do not fit Rule 611’s framework. AMMs price through liquidity pools and bonding curves, so they can’t easily avoid brief quote mismatches with off-chain markets. Crypto firms say removing the rule would clear a major obstacle to on-chain trading of tokenized stocks. The change would not, by itself, legalize tokenized equities. Firms would still need to address registration, custody, settlement, investor rights, and product classification. Traditional market groups welcome review but warn that weakening these rules could affect execution quality, transparency, and market fragmentation.
