SEC proposes dropping NMS rules to enable tokenized stocks

The U.S. Securities and Exchange Commission has proposed eliminating two foundational rules governing equity trading, a move analysts say could significantly reduce barriers for trading tokenized stocks on decentralized finance platforms. The proposal, announced on Thursday, June 11, seeks to rescind Rules 611 and 610e of Regulation NMS, which have shaped market structure since 2005.

Rule 611, known as the Order Protection Rule, prohibits trading venues from executing a transaction at a price inferior to the best displayed quote available on another market. Rule 610e prevents trading centers from displaying quotations that lock or cross the national best bid and offer. The SEC stated the proposal aims to simplify market structure, lower compliance costs, and allow competition and innovation to guide the evolution of equity markets.

SEC Chairman Paul Atkins said the rules may have created unintended consequences that hindered market growth. "This proposal is intended to simplify market structure and reduce costs for market participants while allowing competition, innovation, and other market forces to shape the continuing evolution of our equity markets," Atkins said. The agency...