Benchmark: SEC NMS Rescission Could Free Tokenized Stocks

Benchmark Equity Research called the Securities and Exchange Commission’s June 11 proposal to rescind Rules 611 and 610(e) of Regulation NMS the most consequential U.S. crypto rule of 2026, arguing the change would remove a legal constraint on trading tokenized equities on automated market makers. The SEC opened a 60-day public comment period on the proposal.

The two rules have governed routing and execution across U.S. equities since 2005. Rule 611, known as the Order Protection Rule, requires trading venues to avoid executing trades at prices worse than protected quotations displayed elsewhere, effectively enforcing the national best bid and offer at the moment of execution. Rule 610(e) bars locked and crossed markets by preventing overlapping quotations that violate the displayed price hierarchy.

Benchmark’s note to investors explained those protections have made it difficult for decentralized finance trading models to operate under existing trade-through and quotation rules. Automated market makers set prices with continuous pricing curves and execute trades against liquidity pools rather than routing orders through intermarket systems that reference the NBBO. Because AMMs do not reference intermarket price protection systems, they could not meet the trade-through and quotation rules as written.

The research identified tokenized and crypto equity exchanges as the most immediate potential beneficiaries of a rescission. Benchmark named Securitize as a likely direct beneficiary because of its regulated tokenization and issuer infrastructure work, including projects tied to institutional tokenization efforts. The note also listed Coinbase Global and Galaxy Digital as potential beneficiaries given their trading infrastructure, brokerage services and market-making activity in digital assets.

Benchmark highlighted outstanding questions the SEC proposal does not resolve. These include how tokenized trading venues would register as exchanges or alternative trading systems, how custody of tokenized equities would be handled and what clearance and settlement frameworks would govern peer-to-peer or DeFi-native trading. The research said market participants are watching for a separate innovation exemption the SEC could use to address those gaps.

Benchmark expects the commission to vote on the rescission in early 2027 if the proposal proceeds. The firm framed the proposal as a technical change to the NMS rules that could affect how tokenized equities interact with existing market infrastructure if adopted.