SEC Proposes Repeal of Rule 611, 610 to Enable DeFi Tokenized US Stocks
GLXY•On June 11 the SEC proposed rescinding Rule 611 and Rule 610(e) of Regulation NMS, removing trade-through prohibitions and locked/crossed quote bans that have governed stock order routing since 2005. Galaxy Digital’s head of research Alex Thorn said this shift enables AMM-based tokenized US equities by adopting a broker-level best execution framework.
1. SEC Proposal to Rescind Rule 611 and 610
The SEC on June 11 formally proposed eliminating Rule 611 (Order Protection Rule) and Rule 610(e), lifting trade-through prohibitions and locked/crossed quote bans that have governed stock order routing since 2005, and opened a 60-day public comment period for feedback.
2. Structural Barriers for DeFi Tokenized Stocks
Under current rules, AMM-based tokenized equity trades constantly violate NBBO-based order protection due to algorithmic pricing and inability to halt trades, making them structurally illegal under Regulation NMS.
3. Shift to Broker-Level Best Execution
The proposal replaces per-trade NBBO compliance with a principles-based best execution framework at the broker-dealer level, allowing brokers to interface with DeFi pools while demonstrating overall execution policies designed to achieve best outcomes for clients.
