SEC plans to scrap two NMS rules that hinder tokenized stock trading via DeFi AMMs
The U.S. Securities and Exchange Commission has proposed rescinding Rule 611 and Rule 610(e) of Regulation NMS, marking a significant potential shift in equity market structure. Rule 611, known as the trade-through rule, currently mandates that trading venues execute orders at the National Best Bid and Offer, a requirement that has historically hindered the use of DeFi automated market makers for tokenized stocks. By removing these constraints, the SEC aims to address excessive market fragmentation, which has seen the number of national exchanges grow from four to 17 since the rule's inception. The proposal highlights that off-exchange trading volume exceeded 50 percent in the first half of 2025, while no single exchange held more than a 20 percent market share. Chairman Paul Atkins, a long-time critic of the trade-through rule, is driving this initiative to reduce the latency arms race and the scattering of institutional orders. While the move aligns with the Crypto Task Force agenda, it primarily addresses long-standing concerns regarding market efficiency and liquidity dispersion. This regulatory pivot could lower technical barriers for integrating tokenized equities into decentralized trading environments, representing a major step toward modernizing market infrastructure.
