SEC Moves to Scrap Reg NMS Rules 611 and 610(e), Potential Ripple Effects for Tokenized Stocks

The U.S. Securities and Exchange Commission has proposed rolling back two longstanding provisions of Regulation NMS that shape how U.S. equity orders are routed and quotations are displayed. The initiative is pitched as a cleanup of legacy market mechanics, though it could also carry indirect implications for tokenized equities. What the SEC is proposing The agency is seeking to rescind Rule 611, known as the Order Protection (Trade-Through) Rule, and Rule 610(e), which restricts locked and crossed quotations. Adopted in 2005, Rule 611 generally limits trading venues from executing trades at prices inferior to protected quotes displayed on other venues. Rule 610(e) governs situations where bids and offers across venues produce locked or crossed markets. The SEC argues that, after two decades of market evolution, the rules have contributed to "unintended complexity." It says removing them would simplify equity market structure, reduce trading complexity, and lower costs. Estimated savings and process The SEC estimates annual cost savings of about $54.2 million to $77 million for exchanges, alternative trading systems (ATSs), broker-dealers, and OTC market makers, citing reduced compliance, monitoring, and order-routing infrastructure costs. The proposal will be published in the Federal Register and will be subject to a 60-day public comment period. It is not final and could be revised or withdrawn depending on feedback. Why digital-asset market structure is paying attention The SEC did not present the proposal as a crypto or tokenization initiative. Still, digital-asset market-structure observers are watching closely because tokenized equities and real-world-asset platforms ultimately must operate within the U.S. securities framework. Onchain trading models, particularly automated market makers (AMMs) that trade against liquidity pools using pricing formulas, typically do not route each order to check the national best bid and offer the way traditional venues do. Under a strict trade-through regime, that mismatch can create compliance tension if a tokenized-stock AMM executes at prices that diverge from protected quotes on other venues. In theory, removing rigid per-trade routing requirements could make it easier to design blockchain-based equity trading systems that fit within regulatory constraints. The SEC's stated motivation, though, is simplification and cost reduction in traditional markets$not building a tokenization framework. Key caveats Repealing these Reg NMS rules would not automatically legalize tokenized stocks or eliminate other regulatory hurdles. Exchanges, broker-dealers, ATSs, custody providers, and tokenized-asset platforms would still need to comply with a range of securities-law obligations. Other exchange-level rules and FINRA requirements may also need updates, and changes to Regulation NMS alone would not remove every barrier. Bottom line The SEC's proposal represents a meaningful rethink of legacy U.S. equity market plumbing. While not a crypto rulemaking and not an endorsement of tokenized equities, it could indirectly reduce certain structural frictions for onchain trading models. The public has 60 days to comment. Source: U.S. Securities and Exchange Commission (SEC Newsroom proposal).