The U.S. Securities and Exchange Commission (SEC) has proposed to rescind two key rules of Regulation NMS. This initiative aims to reduce costs for market participants and encourage innovation.
Officials plan to eliminate rules 611 and 610(e). The first prohibits executing trades at prices less favorable than the best offers on other platforms. The second restricts the display of quotes that block or cross prices on other exchanges.
SEC Chair Gary Gensler stated that these rules have been in place for 20 years but have increasingly hindered market development. He believes the regulations have created "unintended consequences" that stifle growth.
The public discussion of the proposal will last for 60 days following its publication in the Federal Register. Afterward, the Commission will make a final decision regarding the rule revisions.
Galaxy Digital described the agency's decision as a crucial step for the development of DeFi. According to Head of Research Alex Thorn, the current rules physically prevent automated market makers (AMMs) from trading tokenized stocks. Decentralized protocols operate based on mathematical formulas and cannot account for the liquidity of external platforms in real-time.
the SEC just proposed rescinding Rule 611 of Reg NMS, the trade-through rule that has defined US equity market structure since 2005
this is a tradfi story, yes, but this is also one of the biggest unlocks yet for tokenized stocks 👇 pic.twitter.com/T0PJvWxysI
— Alex Thorn (@intangiblecoins) June 11, 2026
“AMMs cannot halt a trade just because a better price is available on Nasdaq. Once the rules are rescinded, tokenized stocks will be able to trade legally in DeFi pools,” Thorn explained.
Instead of strict limitations, the SEC plans to adopt a flexible approach based on the principle of "best execution" for trades.
Changes are expected to be approved in the first quarter of 2027. Before that, the Commission may launch pilot projects for tokenization, granting participants temporary exemptions from existing regulations.
It is worth noting that in May, SEC Commissioner Hester Peirce urged the crypto industry to temper expectations regarding an "innovation exemption" for trading tokenized stocks. She stated that the regulator does not plan to allow the issuance of synthetic assets.