SEC proposal to repeal Reg NMS Rules 611 and 610(e) has opened a new debate over the future of U.S. equity market structure and the development of tokenized securities.
The U.S. Securities and Exchange Commission announced the proposal on June 11, beginning a 60-day public comment period.
According to TD Cowen managing director Jaret Seiberg, any final regulatory changes are expected during the first quarter of 2027.
The proposal targets two long-standing provisions of the Regulation National Market System, commonly known as Reg NMS.
Rule 611, often called the trade-through or order protection rule, prevents stock orders from being executed at prices inferior to those available on competing trading venues.
Rule 610(e) prohibits exchanges from displaying quotations that create locked or crossed markets relative to other exchanges.
SEC reviews long-standing market structure rules
The SEC said the proposed changes would eliminate Rules 611 and 610(e) along with related definitions and conforming provisions.
The regulations were originally designed to protect investors from poor execution prices across a fragmented network of trading venues.
However, SEC Chairman Paul Atkins argued that the rules have produced unintended consequences.
In a statement released alongside the proposal, Atkins said it was “high time” for the Commission to revisit regulations that had “hindered, rather than enhanced, the long-term growth of our markets.”
Atkins has opposed the trade-through rule since its adoption more than two decades ago. At the time, he and former Commissioner Cynthia Glassman dissented, arguing that market competition would generate more efficient outcomes than regulatory mandates.
Public consultations helped shape the proposal
The proposal follows two public consultations on equity market structure conducted by the SEC last year.
The agency gathered feedback from exchanges, broker-dealers, and market makers before advancing the proposed revisions.
In remarks delivered during the Commission meeting, Atkins referenced those discussions and said the SEC had approached the issue through a transparent process before introducing the proposal.
The review forms part of a broader effort to reduce regulatory burdens affecting U.S. public markets.
The Tokenized securities sector watches closely
The proposal has attracted attention from participants in the tokenized securities market. During a May 28 speech at Stanford’s Rock Center for Corporate Governance, Atkins discussed broader efforts to remove regulatory barriers that he believes have contributed to a decline in U.S.-listed companies since the mid-1990s.
Galaxy Digital Research executive Alex Thorn described the proposal as “one of the biggest unlocks yet for tokenized stock trading on decentralized exchanges.”
He noted that automated market makers on decentralized exchanges cannot comply with Rule 611 because prices are determined by liquidity pool conditions during transaction validation.
Even if adopted, the proposal would not remove existing requirements involving exchange registration, alternative trading systems, clearing, settlement, or other securities regulations governing market operations.
