The U.S. Securities and Exchange Commission has proposed removing two central rules under Regulation National Market System, a move that could reshape how U.S. equities trade and affect the future of tokenized stocks.
In a June 11 release, the agency outlined plans to rescind Rules 611 and 610(e), provisions that have governed equity market structure since 2005. The proposal also includes the removal of related definitions under Rule 600 and additional conforming changes.
SEC Chairman Paul S. Atkins framed the initiative as a reassessment of long-standing regulation.
"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," he said. He added, "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."
The proposal has entered a 60-day public comment period following its publication in the Federal Register.
Trade-through protections defined market behavior
Rule 611, known as the trade-through rule, prevents execution of trades at prices worse than the best available quotation across trading venues. It requires trading centers to route orders or avoid execution when a superior price exists elsewhere.
Rule 610(e) addresses locked and crossed markets. It prohibits trading venues from displaying quotes that match or exceed the national best bid and offer in a way that disrupts price order.
These mechanisms formed the backbone of the national market system. They aimed to ensure price priority and protect displayed liquidity across exchanges. Over time, the rules also contributed to a fragmented system with multiple venues and routing requirements.
Atkins addressed this outcome in remarks at the SEC open meeting. He stated that the rule contributed to "a proliferation of new trading venues, which in turn fragmented liquidity and created an increasingly complex, costly, and opaque marketplace for order execution."
DeFi models face structural incompatibility
The proposed rollback has drawn attention from digital asset firms that focus on tokenized equities. Alex Thorn, head of firmwide research at Galaxy Digital, described the change as "one of the biggest unlocks yet" for onchain stock trading.
the SEC just proposed rescinding Rule 611 of Reg NMS, the trade-through rule that has defined US equity market structure since 2005
— Alex Thorn (@intangiblecoins) June 11, 2026
this is a tradfi story, yes, but this is also one of the biggest unlocks yet for tokenized stocks 👇 pic.twitter.com/T0PJvWxysI
He explained that automated market makers cannot operate within the constraints imposed by Rule 611.
"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," Thorn wrote.
He added that such systems lack the ability to route intermarket sweep orders or integrate consolidated quote data with the latency standards required in traditional markets.
"Any pool in a tokenized NMS stock would commit trade-throughs constantly and arguably be an illegal trading center," he wrote.
Rule 610(e) creates similar limitations. Thorn noted that liquidity pools adjust prices continuously based on order flow. That process can produce quotes that lock or cross the national best bid and offer, a condition that regulated venues must avoid under current rules.
Shift toward principles-based execution framework
If the SEC proceeds with the rescission, market oversight would rely more heavily on broker-level obligations. Thorn pointed to FINRA Rule 5310, which requires brokers to seek best execution for customer orders.
This framework does not impose trade-by-trade routing constraints. It allows flexibility in how execution quality is assessed. Thorn argued that such an approach can accommodate decentralized trading systems more effectively.
He linked the proposal to a broader regulatory direction.
"At a high level, this is the SEC executing the Project Crypto playbook: clear the hardest market structure obstacle via rescission, then handle venue registration issues (at least temporarily) through the innovation exemption," he said.
Timeline and remaining barriers
Jaret Seiberg of TD Cowen’s Washington Research Group stated in a note that the proposal is likely to move forward, as repealing these rules has been a long-term priority for Atkins. He expects final adoption in the first quarter of 2027.
Seiberg also indicated that the SEC may not wait for full rule adoption before allowing limited tokenization efforts. He wrote that the agency could grant exemptive relief from Rule 611 to support early pilot programs.
Despite the potential shift, tokenized equities face additional regulatory hurdles. These include exchange or Alternative Trading System registration requirements, as well as clearing and settlement rules that do not align with decentralized infrastructure.
The proposal does not authorize tokenized stock trading by itself. It begins a formal rulemaking process that invites feedback from market participants. The outcome will depend on the comment period and subsequent revisions.
The SEC has signaled that further measures, including a possible innovation exemption, may address remaining constraints. Details on that framework have not yet been finalized.
Roman Zaika
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