According to TechFlow, the U.S. Securities and Exchange Commission has proposed rescinding Reg NMS Rule 611, known as the Order Protection Rule, as well as Rule 610(e), which covers locked and crossed market restrictions. The proposal has entered a 60-day public comment period. Although the proposal concerns U.S. equity market-structure rules, Alex Thorn connected the move to the way tokenized U.S. stocks could be traded in DeFi environments.
Rule 611 and protected quotations
Alex Thorn said the SEC’s proposal may remove a core market-structure obstacle for tokenized U.S. equities in DeFi trading. Under his explanation, Rule 611 requires trading centers not to execute trades at prices worse than protected quotations available on other exchanges. That framework is designed around traditional market centers and protected quotes, while on-chain execution follows a different process.
Thorn noted that automated market makers, or AMMs, have difficulty meeting these requirements because they price through liquidity pools and execute under conditions involving slippage and block time. In other words, the mechanics of pool-based pricing and on-chain confirmation differ from the protected-quote framework used by traditional securities trading venues.
AMMs and tokenized stock execution
According to Thorn’s view, if the current trade-by-trade constraint were later replaced by a broker-level “best execution” obligation, the room for adapting on-chain liquidity pools to tokenized stock trading would expand. The key point is the shift in where the obligation sits: from protecting each individual trade against other protected quotations, toward execution duties handled at the broker level.
For now, the SEC’s proposal covers the rescission of Reg NMS Rule 611 and Rule 610(e), and the process is in a 60-day comment period. Thorn’s comments frame the proposal through the lens of tokenized U.S. stock trading in DeFi, with particular attention to AMMs, liquidity-pool pricing, slippage, block-time execution, and the possible use of broker-level best execution obligations.