SEC proposes scrapping trade-through rules, 60-day review

The U.S. Securities and Exchange Commission on Thursday proposed rescinding two National Market System rules-Rule 611, known as the trade – through rule, and Rule 610(e) – and opened a 60-day public comment period.

Rule 611 requires that a stock order not be executed at a worse price when a better quote is available on another exchange. Rule 610(e) restricts venues from displaying quotes that match or exceed prices posted elsewhere. The SEC will take comments for 60 days from publication before reviewing feedback and considering any revisions.

Galaxy’s head of research, Alex Thorn, called the proposal “one of the biggest unlocks yet for tokenized stocks,” arguing that it would remove “one of the biggest structural barriers to tokenized U.S. equities trading in DeFi.”

Thorn’s view is that blockchain-based automated market makers, or AMMs-programs that pool assets and execute trades at the pool’s current price – cannot comply with trade – through obligations because they do not route orders to other venues or pause executions to check quotes elsewhere. He argued that a tokenized equity AMM “would commit trade-throughs constantly and arguably be an illegal trading center” under the current framework. He also noted that AMM prices update continuously, which can conflict with rules designed to ensure a single national best price across centralized order books.

Thorn expects the SEC to pair any rescission with a “best execution” framework focused on brokers and trading venues seeking the most favorable terms for customers rather than mandating intermarket order protection. In his view, such an approach could permit AMMs and other blockchain-based trading mechanisms while maintaining oversight of execution quality.

The proposal comes amid internal SEC work to adapt market structure for digital assets and distributed ledger technology. In August 2025, the agency launched Project Crypto to develop rules for the use of digital assets and blockchain in U.S. markets. Separately, the agency had been preparing a plan last month to allow trading in tokenized stocks, but postponed it after officials from stock exchanges raised questions about implementation.

Tokenized stocks are digital representations of equity shares issued on a blockchain. They can enable on-chain settlement and potential integration with decentralized finance protocols. Supporters cite the potential for longer trading hours, faster settlement and broader access, while critics raise questions about regulation, market integrity and investor protection across on-chain pools and traditional venues.

Under the SEC’s process, the public can submit comments for 60 days from publication. After the window closes, the agency will evaluate submissions and may amend the proposal before any final rulemaking. If the trade-through and display rules are rescinded and replaced with a best execution standard, market participants handling tokenized equities would still need to comply with other federal securities laws and any conditions the SEC sets for such trading.

Thorn pointed to the comment period as a chance for industry participants to address how execution standards could be aligned with AMM mechanics and tokenized assets. In his view, removing trade-through obligations could open compliant paths for on-chain stock pools in the U.S., provided other regulatory requirements are met.