The U.S. Securities and Exchange Commission on June 11, 2026, proposed rescinding Rules 611 and 610(e) of Regulation NMS — the trade-through prohibition and locked/crossed quotation restrictions that have governed American equity markets since 2005. The SEC estimates annual compliance savings of ...
"After two decades of Rule 611, it is high time that the Commission review its unintended consequences that have hindered — rather than enhanced — the long-term growth of our markets." — Paul S. Atkins, Chairman, U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission on June 11, 2026, proposed rescinding Rules 611 and 610(e) of Regulation NMS — the trade-through prohibition and locked/crossed quotation restrictions that have governed American equity markets since 2005. The SEC estimates annual compliance savings of $54.2 million to $77 million for exchanges, alternative trading systems, broker-dealers, and OTC market makers. A 60-day public comment period follows Federal Register publication.
The proposal is not a crypto rule. It is a market structure overhaul aimed at simplifying two decades of regulatory complexity that contributed to the proliferation of more than 60 trading venues and pushed over 40% of U.S. equity volume into dark pools. But its second-order effects on tokenized equities are substantial. Automated market makers — the core trading mechanism of decentralized finance — cannot comply with Rule 611 by construction. Removing the trade-through prohibition eliminates what Galaxy Digital's head of research Alex Thorn called "one of the biggest structural barriers to tokenized US equities trading in DeFi." The tokenized equities market, which crossed $1 billion in market capitalization and $15 billion in Q1 2026 trading volume, stands to gain a regulatory pathway that did not exist before June 11.
Three Republican commissioners voted unanimously. The SEC has operated with a 3-0 GOP majority since Commissioner Caroline Crenshaw departed in January 2026. SIFMA, the securities industry trade group, endorsed the direction. Commissioner Hester Peirce titled her supporting statement "Disorder Protection Rule" — a pointed rebranding of the Order Protection Rule she argued had "helped fuel disorder by encouraging the proliferation of exchanges, dampening innovation within them, and inspiring ever more complex order types."
On June 11, 2026, the SEC voted to propose amendments that would:
The proposal does not touch other components of Regulation NMS, including Rules 605 (order execution quality disclosure), 606 (order routing disclosure), or the core access fee framework under Rule 610(a)-(d).
The SEC estimated that rescinding these two rules would save market participants between $54.2 million and $77 million annually in compliance, monitoring, and routing infrastructure costs. The public comment period runs 60 days from Federal Register publication.
Regulation NMS was adopted in 2005 to modernize U.S. equity market structure after a decade of fragmentation. Rule 611's trade-through prohibition was designed to protect investors by ensuring their orders executed at the National Best Bid and Offer (NBBO) regardless of which venue received the order.
The rule achieved its stated objective. Trade-throughs declined. But the side effects compounded over two decades:
Exchange proliferation. The U.S. equity market grew from roughly 10 trading venues in 2005 to more than 60 today — 16 registered exchanges, over 50 dark pools, and numerous alternative trading systems. Rule 611 required routing infrastructure to connect every venue, which lowered barriers to launching new venues while creating systemic complexity.
Dark pool growth. Trading that occurs off-exchange rose from approximately 15% of U.S. equity volume in 2008 to over 40% by early 2026. Data from FINRA's ATS transparency statistics showed off-exchange execution exceeding 51.8% of total volume in late 2024 — the first time a majority of U.S. equity trading occurred outside lit exchanges. The irony is direct: a rule designed to protect displayed quotations incentivized institutional traders to move to venues where quotations are not displayed.
Complexity costs. Broker-dealers must maintain Smart Order Routers capable of scanning all protected quotations across all exchanges in real time, routing orders accordingly, and documenting compliance. Nasdaq filed comments supporting Rule 611 review, arguing the rule generated unintended consequences including this routing complexity.
Commissioner Peirce, in her June 11 statement, argued the rule "helped fuel disorder by encouraging the proliferation of exchanges, dampening innovation within them, and inspiring ever more complex order types on those exchanges." She characterized the proposal as removing "rules that technological advances have rendered unnecessary."
The intersection between Regulation NMS and decentralized finance is structural, not interpretive. Automated market makers — the dominant trading mechanism on platforms like Uniswap, Curve, and potential tokenized equity venues — operate through bonding curves and liquidity pools. Their pricing mechanism is fundamentally incompatible with Rule 611's requirements.
How AMMs price trades. An AMM calculates execution price using a mathematical formula (typically x * y = k for constant-product AMMs) applied to the assets in a liquidity pool. The price a trader receives depends on the pool's current reserves, the size of the trade (slippage), and the block time at which the transaction settles. There is no order book. There is no quotation display system. There is no mechanism to check whether a better price exists on another venue before executing.
The compliance gap. Rule 611 requires that no trade execute at a price inferior to a protected quotation on another exchange. According to Galaxy Digital's research, "a pool trading tokenized stocks under the current framework would repeatedly commit violations of the trade-through rule." Thorn wrote: "An AMM cannot comply with 611 by construction. It executes against a bonding curve at whatever the pool price is, with slippage, at block-time granularity."
The legal consequence. Under current rules, any AMM pool offering tokenized U.S. equities "would commit trade-throughs constantly and arguably be an illegal trading center," according to Thorn. This has effectively barred DeFi protocols from offering tokenized NMS stocks — not because the SEC explicitly prohibited it, but because the mechanical requirements of a 20-year-old equity market rule made compliance impossible.
Rescinding Rule 611 does not legalize tokenized equity AMMs. But it removes one of the most significant structural barriers that prevented them from being considered as legitimate trading venues.
The tokenized equities market remains small by traditional finance standards but has grown materially in 2026:
These figures represent less than 0.01% of global equity market capitalization ($115 trillion). But the growth rate — from zero to $15 billion quarterly in under a year — indicates demand for blockchain-settled equity exposure exists.
On the platform side, competition is intensifying. Binance launched bStocks on June 12, 2026. Kraken offers tokenized equities through xStocks. Robinhood has expanded tokenized stock offerings. Coinbase has indicated plans to add stock trading. Nasdaq and NYSE both received SEC approval for tokenized equity listing rules in Q1 2026.
The SEC's proposal does not create a replacement framework. It removes Rule 611 and relies on existing regulatory infrastructure to protect investors:
FINRA Rule 5310 (Best Execution). Broker-dealers are already required to use "reasonable diligence" to ascertain the best market for a security and execute at the most favorable terms available. This duty exists independently of Rule 611 and would continue to apply to all broker-dealer executions.
Exchange self-regulatory obligations. Exchanges maintain their own best execution standards and surveillance systems. The SEC's position is that these mechanisms, combined with enhanced transparency requirements under Rules 605 and 606, provide sufficient investor protection without a mandatory trade-through prohibition.
Market competition. The SEC argues that in a 60+ venue market with sub-millisecond data feeds, market forces discipline pricing more effectively than a routing mandate that creates compliance infrastructure costs exceeding $54 million annually.
The open question is whether a best-execution framework provides enough flexibility for AMM-based trading while maintaining adequate investor protection. AMMs do not route orders. They execute at pool price. Whether "reasonable diligence" accommodates bonding-curve pricing is a question the SEC has not answered — and one that will likely dominate the 60-day comment period.
SIFMA — the Securities Industry and Financial Markets Association — endorsed the proposal's direction. President and CEO Kenneth E. Bentsen Jr. stated that SIFMA "appreciates the due diligence the SEC performed" and was "encouraged that the proposal includes making conforming changes to other related provisions."
Galaxy Digital — Alex Thorn characterized the proposal as "one of the biggest developments yet for tokenized equities," noting it removes the primary structural incompatibility between DeFi trading infrastructure and U.S. equity market rules.
Nasdaq — had previously filed comments supporting Rule 611 review, arguing the rule generated unintended consequences. Nasdaq's support is notable given that exchanges theoretically benefit from protected quotation status under the current regime.
250 Digital Asset Management — characterized Regulation NMS as "one of the most significant structural barriers to the development of [tokenized equity] financial products."
No major opposition statements from investor advocacy groups or institutional investors had been published at the time of writing. The 60-day comment period will likely surface objections from parties that benefit from the current framework, including certain exchange operators and institutional traders who use trade-through protections as execution quality guarantees.
Rescinding Rule 611 removes one barrier. Several others remain for tokenized equities:
Securities registration. Tokenized equities must comply with Securities Act registration requirements or qualify for an exemption. Most current products — including Ondo Global Markets and xStocks — are structured as tracker certificates or economic-exposure instruments rather than registered securities, meaning they provide price exposure without voting rights or direct equity ownership.
Settlement infrastructure. Traditional equities settle T+1 through DTCC. Tokenized equities settle on-chain, often in seconds. The regulatory frameworks for these two settlement regimes have not been harmonized. DTCC's $114 trillion tokenization pilot, scheduled for July 2026, may begin to address this gap.
Custody and investor protection. All major tokenized equity products use 1:1 backing by real shares held in regulated custody. This architecture is sound but creates single points of failure — as demonstrated when three of four exchanges failed to deliver tokenized SpaceX shares during the June 12 IPO due to upstream allocation failures.
Jurisdictional complexity. The xStocks model — Jersey-incorporated issuer, ADGM-domiciled securities, distributed via Cayman-registered exchanges to global retail users — exemplifies multi-jurisdictional complexity that no single regulator fully oversees. ESMA has warned of a "risk of misunderstanding" around these products.
AMM-specific regulation. Even without Rule 611, an AMM offering tokenized NMS stocks would need to register as an exchange or ATS, comply with Regulation ATS, and demonstrate adequate surveillance and investor protection. These requirements have not been tailored for decentralized trading infrastructure.
The SEC's proposal to rescind Rule 611 is, on its face, a traditional equity market structure reform. Chairman Atkins framed it as removing "unintended consequences that have hindered the long-term growth of our markets." The estimated $54–77 million in annual compliance savings accrues to incumbents — exchanges and broker-dealers — not to crypto platforms.
But the second-order effects for tokenized equities are disproportionate. A 20-year-old rule designed for a market with fewer than 10 exchanges has, by accident of its mechanics, blocked the most widely deployed decentralized trading technology from participating in U.S. equity markets. AMMs cannot check the NBBO before executing. They cannot route orders to better-priced venues. They cannot comply with Rule 611 without ceasing to function as AMMs.
Whether the rescission ultimately enables tokenized equity AMMs depends on the resolution of several other regulatory questions — registration, custody, settlement, and jurisdictional oversight — none of which this proposal addresses. The comment period will reveal whether investor advocates accept the trade-off of removing a price-protection mandate in exchange for market simplification. And the tokenized equity sector, which grew from zero to $15 billion in quarterly volume within a year, will be watching to see whether the door that Rule 611's removal opens leads to a regulated pathway or another regulatory gap.
The data is clear on one point: the old market structure created the problems it was designed to prevent. Whether the new one avoids the same trap is the question this proposal puts to the market.