Odaily reported that Galaxy research head Alex Thorn said the U.S. Securities and Exchange Commission is planning to repeal two provisions under Regulation National Market System, or Reg NMS: Rule 611, known as the “order protection rule,” and Rule 610(e). In Thorn’s view, removing these provisions could become an important turning point for the development of tokenized equities and would align with the SEC’s broader “Project Crypto” roadmap.
Rule 611 and the NBBO requirement
Thorn explained that Rule 611 requires trades to follow the National Best Bid and Offer, or NBBO. Under the current structure, execution must be arranged around the best quoted price available across the market. That requirement has long created a difficult fit for on-chain automated market makers, which do not operate in the same way as traditional equity trading venues.
According to Thorn, AMMs cannot route orders in real time, connect to low-latency market data, or pause trading simply because another exchange is displaying a better quote. These limitations have made it difficult for AMMs to satisfy the existing regulatory expectations. Thorn described this as one of the main structural obstacles preventing tokenized U.S. stocks from being deployed in DeFi settings.
Best execution duties and innovation exemptions
Thorn said that if the framework shifts from trade-by-trade regulatory requirements to broker-dealer “best execution” obligations, on-chain liquidity pools and AMM mechanisms would be easier to bring into a compliant structure. The change would not resolve every issue facing tokenized securities, as Thorn also noted that trading venue registration, clearing and settlement questions remain.
He added that the SEC’s planned “innovation exemption” mechanism is expected to further support related development. Thorn characterized the repeal of these market-structure barriers as an important step in implementing the SEC’s “Project Crypto” roadmap, creating a clearer path for tokenized stocks, AMMs and innovation in on-chain securities trading.