Benchmark Equity Research said the Securities and Exchange Commission’s June 11 proposal to rescind two decades-old market structure rules is "the most consequential piece of regulation to impact the U.S. crypto space" this year, arguing it would remove a key constraint on tokenized equities trading, lending and settlement on public blockchains.
The agency last week proposed scrapping Rule 611 and Rule 610(e) of Regulation NMS, the trade-through framework that has governed routing and execution for every U.S. equity since 2005. The SEC said the proposal is intended to simplify market structure and reduce costs while allowing competition and innovation to shape the evolution of U.S. equity markets.
In a note to investors on Monday, Benchmark analyst Mark Palmer said the rescission would remove the primary legal obstacle that has kept tokenized stocks from trading on automated market makers.
According to the note, Rule 611, known as the Order Protection Rule, requires trading centers to avoid executing trades at prices inferior to protected quotations displayed on other venues, effectively enforcing compliance with the national best bid and offer at the moment of execution. Rule 610(e) prohibits locked and crossed markets, requiring venues to prevent quotations that overlap in ways that violate the displayed price hierarchy.
