Galaxy Research Director: U.S. SEC plans to abolish NMS611 rule to token U.S. stock trading bottlenecks are expected to be lifted

On June 12, Galaxy research director Alex Thorn said that the U.S. Securities and Exchange Commission (SEC) had just proposed to revoke Section 611 of the National Market System Rules (RegNMS), which is the penetrating trading rule that has shaped the overall structure of the U.S. stock market since 2005. This matter certainly belongs to the category of traditional finance, but it is also one of the major positive breakthroughs for tokenized stocks. The committee voted to abolish Section 611 (order protection rules) and Section 610(e)(market lock-in/cross-restriction rules) and revise supporting definitions. This proposal will start a 60-day public comment collection period. At present, it is only at the proposal stage and has not yet been officially implemented, but the direction of regulatory reform is very clear. Section 611 requires that all trading venues must not trade at protected quotes inferior to other exchanges. At the practical level, every transaction of a stock in the National Market System (NMS) must refer to and abide by the National Best Bid Quotes (NBBO) at the instant of transaction. This rule is one of the core structural obstacles for Decentralized Finance (DeFi) to conduct tokenized U.S. stock trading at the time. Automated market makers (AMM) cannot meet the requirements of Section 611 from the underlying mechanism: it prices transactions according to the bond curve of the fund pool, the price has its own slippery point, and the update granularity is based on block time. Automated market makers cannot issue cross-market sweeps, cannot stably access Securities Information Processor (SIP) market data with low latency, and cannot suspend a conversion transaction just because a better quote appears on Nasdaq. Any fund pool that launches tokenized NMS shares will continue to trigger penetration trading violations, and the trading venue may be deemed to be operating in non-compliance from the legal level.