SEC Proposes Scraping Rule That Could Unlock Tokenized US Stocks Market

The US Securities and Exchange Commission (SEC) has proposed to rescind Rule 611 of Regulation NMS, a move that could have significant implications for tokenized US stocks.

Rule 611 prohibits trade-throughs, which are trades executed at a price worse than the best protected quote available on any other registered exchange. This rule has been a major obstacle for decentralized finance (DeFi) Automated Market Makers (AMMs) that offer tokenized US stocks, as they cannot guarantee NBBO compliance on each atomic swap.

The SEC's proposed replacement is a principles-based best execution framework applied at the broker-dealer level. This shift makes AMM-based tokenized equities workable, as brokers interfacing with DeFi pools would need to demonstrate policies reasonably designed to achieve best execution for clients overall.