The U.S. SEC Proposes to Remove Key NMS Rules, Potentially Loosening Chain-Based U.S. Stock Trading

ChainCatcher report: The U.S. SEC has proposed revoking two core rules under Regulation NMS—Rule 611 and Rule 610(e)—to simplify market structure and promote the long-term development of U.S. capital markets. SEC Chairman Paul Atkins stated that the proposal aims to reduce trading costs and foster continuous evolution of market structure through competition and market mechanisms. These rules were established in 2005: Rule 611 requires trades to execute at the best available price, prohibiting execution at prices worse than those offered on other markets; Rule 610(e) prohibits locked or crossed quotes. Analysts note that this adjustment could have structural implications for tokenized U.S. stocks and DeFi trading. Alex Thorn, Research Director at Galaxy Digital, said Rule 611 has long been a key constraint on on-chain stock trading, as automated market maker (AMM) mechanisms inherently struggle to meet requirements for cross-market best price execution and trade routing. If repealed, market execution may shift toward a framework based on “best execution obligations,” creating greater regulatory space for on-chain trading, automated market making, and tokenized equities. TD Cowen analysis suggests the proposal is likely to be finalized in the first quarter of 2027, but the SEC may facilitate early tokenization pilots through exemption mechanisms before the final rule is issued.