TL;DR:
- On June 11, 2026, the SEC submitted an official proposal to rescind Rule 611 and Rule 610(e) of Regulation NMS.
- Rule 611 requires trading centers to prevent the execution of orders at prices inferior to protected quotes displayed in other markets.
- Automated market makers (AMMs) operate through bonding curves and liquidity pools, a technical design that prevents traditional intermarket order routing.
The US Securities and Exchange Commission (SEC) submitted a regulatory proposal to eliminate a stock-trading rule that has governed Wall Street for the past two decades. The change seeks to remove provisions from Regulation NMS that hinder blockchain-based trading and the integration of tokenized assets into the national market system.
The initiative formalized by the agency last Thursday proposes the rescission of Rule 611, known as the trade-through rule, and Rule 610(e), which restricts locked and crossed quotations. While for traditional Wall Street actors this represents a technical debate over execution quality, for crypto-asset firms it means the removal of a historic regulatory obstacle.
The impact of Regulation NMS on financial technology
Rule 611 was originally adopted in 2005 with the objective of protecting institutional and retail investors. The rule requires that orders are not executed at prices worse than the National Best Bid and Offer (NBBO) displayed in traditional markets.
According to analysis from Galaxy Digital, this structure is incompatible with the technical design of decentralized finance (DeFi) platforms. Decentralized platforms calculate their prices through mathematical formulas in fixed time blocks. Data from the research firm indicates that an automated market maker (AMM) cannot comply with Rule 611 by construction.
Liquidity pools on the blockchain experience price variations based on slippage and the liquidity available within each smart contract. Blockchain-based systems do not process consolidated market data with the latency guarantees demanded by traditional exchanges like Nasdaq or NYSE. According to the institutional report, a pool trading tokenized stocks under the current framework would repeatedly commit violations of the trade-through rule by printing values that differ from those of the traditional market.
Rule 610(e) adds a similar operational difficulty due to fluctuations in the crypto market. Prices in a decentralized environment drift as swaps are executed within the pool. Official documentation notes that on-chain values can temporarily lock or cross the traditional NBBO indicator, a situation that current regulations explicitly prohibit for authorized trading centers.
Opening toward tokenized shares
Tokenized shares represent commercial securities or claims on company shares through distributed ledgers. Supporters argue that these tools allow for continuous 24-hour trading, fractional ownership, and more efficient transaction settlement.
The tokenized shares segment maintains a small volume compared to US equities. However, interest from commercial banking and asset managers has increased due to the pursuit of mechanisms to transition regulated instruments onto public or permissioned blockchain networks.
Representatives from 250 Digital Asset Management pointed out that Regulation NMS has functioned as one of the most significant structural barriers to the development of these financial products. Following the publication of the SEC’s proposal, the document will enter a public comment period before a final vote by the agency’s commissioners.
