SEC chair backs proposal to rescind Rule 611 trade-through rule

The SEC is advancing a proposal to rescind Rule 611, the Regulation NMS trade-through rule, and Rule 610(e), reopening debate over whether those rules distorted U.S. equity market structure and now clash with newer trading models. SEC Chairman Paul S. Atkins said Rule 611 had long been viewed as a "grave misstep" and argued it encouraged venue proliferation, fragmented liquidity, and made order execution more complex, costly, and opaque. The agency opened a 60-day public comment period after Federal Register publication and said the changes could save market participants $54.2 million to $77 million a year. The proposal also pointed to increasingly automated markets and cited 24-hour trading, tokenized securities, smart contracts and AMMs as relevant technological developments. Market observers, including Galaxy Digital's Alex Thorn, said ending the rules could be a major unlock for tokenized U.S. stocks in DeFi and other decentralized or onchain markets, because automated market makers and similar blockchain-based trading systems cannot readily comply with national best bid and offer and locked-market requirements. TD Cowen's Jaret Seiberg said the rule is likely to be finalized in the first quarter of 2027 and that the SEC may grant exemptive relief for tokenization pilots before then.