The U.S. Securities and Exchange Commission on June 11 proposed rescinding Rule 611 and Rule 610(e) of Regulation NMS, the 21-year-old order-protection and quote-locking provisions that have governed how U.S. equities are routed and executed since 2005. The proposal opens a 60-day public comment ...
"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." — Alex Thorn, Head of Firmwide Research, Galaxy Digital
The U.S. Securities and Exchange Commission on June 11 proposed rescinding Rule 611 and Rule 610(e) of Regulation NMS, the 21-year-old order-protection and quote-locking provisions that have governed how U.S. equities are routed and executed since 2005. The proposal opens a 60-day public comment period and, according to TD Cowen's Washington Research Group, could reach a final vote by Q1 2027.
The move has immediate implications for tokenized equities. Rule 611 required every trading venue to route orders to whatever exchange displayed the National Best Bid and Offer (NBBO). Automated market makers — the pricing engines underlying decentralized finance — cannot comply with that requirement by construction. Any AMM pool listing a tokenized NMS stock would execute constant trade-throughs, rendering it an illegal trading center under the existing framework. The SEC's proposed replacement — a principles-based best execution standard applied at the broker-dealer level — could accommodate AMMs for the first time.
Benchmark equity research analyst Mark Palmer called the proposal "the most consequential piece of regulation to impact the U.S. crypto space" in 2026. The tokenized equities market has already crossed $1 billion in aggregate market capitalization with over 185,000 holders, up from roughly $20 million and fewer than 1,500 users in December 2024. Q1 2026 spot trading volume for tokenized stocks reached $15.12 billion, surpassing the $14.84 billion recorded in the final two quarters of 2025 combined.
Rule 611, known as the Order Protection Rule or trade-through rule, was adopted in 2005 as part of Regulation NMS. It requires trading centers — exchanges, alternative trading systems (ATSs), and broker-dealer matching engines — to establish, maintain, and enforce policies preventing the execution of trades at prices inferior to the best displayed quotation available across all NMS exchanges.
In practical terms, if the NYSE displays a bid for Apple at $200.05 and Nasdaq displays $200.03, a broker routing to Nasdaq must redirect the order to NYSE. The rule was designed to prevent fragmentation and ensure investors received the best available price across a then-proliferating number of electronic exchanges.
Rule 610(e), the companion provision, prohibits exchanges from displaying locked or crossed quotations — situations where one venue's bid equals or exceeds another venue's ask. Together, the two rules created a tightly coupled, centralized routing infrastructure across U.S. equity markets.
The rules presuppose a specific architecture: discrete venues with order books that display quotations in real time, connected by intermarket linkages that route orders between them. This architecture is fundamentally incompatible with how decentralized protocols price assets.
Automated market makers do not maintain order books. They price assets along a mathematical bonding curve — typically a constant-product formula (x * y = k) — where the price adjusts algorithmically based on the ratio of assets in a liquidity pool. Execution occurs at whatever price the curve dictates at the time of the transaction, with slippage determined by trade size relative to pool depth.
This creates three structural conflicts with Rule 611:
According to Galaxy Digital's Alex Thorn, Rule 611 constituted "one of the biggest structural barriers" to tokenized U.S. equities trading in DeFi. Any protocol attempting to list tokenized NMS stocks on an AMM would be operating as an illegal trading center under the current regulatory framework.
The SEC's June 11 proposal (Release No. 34-103348) would rescind both Rule 611 and Rule 610(e) entirely. In their place, the agency proposes a principles-based best execution framework applied at the broker-dealer level.
Under this framework:
SEC Commissioner Hester Peirce stated in her supporting remarks that the existing Order Protection Rule had "helped fuel disorder" by encouraging exchange proliferation and suppressing innovation. Commissioner Mark T. Uyeda noted that "market participants have repeatedly indicated that in today's evolving technology-driven trading environment, these provisions often introduce unnecessary complexities, burdens, and inefficiencies."
The proposal was adopted unanimously by the Commission.
The tokenized equities sector has grown substantially from a negligible base:
This growth has occurred entirely within the constraints of Rule 611 — meaning tokenized equities have been limited to synthetic or offshore structures, non-NMS securities, or platforms operating under exemptive relief. The Rule 611 rescission would potentially open the path for regulated on-chain trading of actual NMS-listed U.S. stocks.
Benchmark (Mark Palmer): Called the proposal "the most consequential piece of regulation to impact the U.S. crypto space" in 2026. Identified Securitize as the most direct potential beneficiary, citing its role as tokenization infrastructure provider for BlackRock's BUIDL initiative and its pending partnership with the New York Stock Exchange to build a tokenized securities platform.
Galaxy Digital (Alex Thorn): Described the rescission as "one of the biggest unlocks yet" for tokenized stocks in DeFi. Noted that "the proposed framework can accommodate an AMM. The old one never could."
TD Cowen (Jaret Seiberg): Projected a final SEC vote on rescission by Q1 2027 under a standard comment-and-reproposal cycle. Indicated that the SEC is not expected to wait for finalization before approving tokenization pilots, with exemptive relief likely to be granted to early-stage initiatives before the formal rule change.
NYSE-Securitize: The New York Stock Exchange in March 2026 tapped Securitize to design its tokenized securities platform, with a launch timeline targeting late 2026 pending SEC and FINRA approval. Securitize separately announced an agreement with Computershare to support U.S.-listed clients in issuing equity securities in tokenized form. The company is going public at a $1.25 billion valuation via a SPAC merger with Cantor Equity Partners II.
Morrison Foerster (legal analysis): Characterized the proposal as a "landmark rollback" of core Regulation NMS requirements, noting it also delays implementation of the SEC's 2024 market structure reforms including tick-size changes and order-by-order competition rules.
The rescission of Rule 611, even if finalized, does not clear all regulatory barriers to tokenized equities on DeFi platforms. Several structural issues remain:
| Date | Event | |------|-------| | June 11, 2026 | SEC proposes rescission of Rules 611 and 610(e) | | August 2026 (est.) | 60-day public comment period closes | | Late 2026 | NYSE-Securitize tokenized securities platform targets launch (pending SEC/FINRA approval) | | Q1 2027 (est.) | Final SEC vote on rescission (TD Cowen projection) | | TBD | SEC "innovation exemption" framework for tokenization pilots |
The SEC may grant exemptive relief to tokenization pilot projects before the formal rescission is finalized, according to TD Cowen's Seiberg. This would allow platforms like the NYSE-Securitize joint venture to begin operations under interim conditions while the permanent rule change works through the administrative process.
The proposed rescission of Rule 611 removes what market participants have identified as the single largest structural barrier to trading tokenized U.S. equities on decentralized infrastructure. The replacement best execution framework acknowledges that price discovery can occur through mechanisms other than centralized order books, a concession that was structurally impossible under the 2005 architecture.
The economic significance is measurable. Tokenized equities already constitute a $1 billion market growing at triple-digit annual rates, confined to non-NMS securities and synthetic structures. Access to the $55 trillion U.S. equities market — the world's largest — through on-chain rails would represent a categorical expansion of the addressable market.
Whether that expansion materializes depends on the resolution of remaining regulatory and technical barriers. The SEC's proposal addresses one necessary condition. It is not a sufficient one. Exchange registration, settlement infrastructure, and surveillance integration remain open questions without clear timelines. The comment period will test whether market participants view the best execution framework as workable or whether additional accommodations are needed for on-chain trading venues.
The data suggests the market is not waiting for regulatory clarity to arrive. It is building ahead of it.