#What is happening with Rule 611?
The SEC is on the verge of proposing to entirely repeal Rule 611, commonly referred to as the trade-through rule. A commission vote is set for the week of June 9, 2026. If this proposal gains approval, it would reverse one of the most significant regulations affecting U.S. equity markets in the last two decades.
Rule 611 was implemented in 2005 as part of the larger Regulation NMS framework. This regulation mandates that trading venues must route orders to the exchange offering the best price. The intent is to prevent trades from being executed at lower prices when better options exist elsewhere.
#Why is there criticism of the trade-through rule?
The trade-through rule has faced criticism since its inception. SEC Chairman Paul Atkins was opposed to the rule in 2005, claiming it created market distortions and encouraged manipulative trading behaviors. Now in a position of authority, he seeks to address these concerns directly.
The push for repeal has gained significant traction, particularly after a roundtable discussion by the SEC on September 18, 2025. During this session, market stakeholders raised their voices in favor of removing the rule. They pointed to heightened compliance costs, fragmentation of the market, and decreased competition as key issues.
#How does this relate to tokenized securities?
Reforming Rule 611 could pave the way for trading in tokenized securities, supporting the SEC’s broader initiative known as “Project Crypto.” Trading systems that utilize blockchain technology do not align neatly with the existing requirements for “protected quotations” seen on standard exchanges. Hence, eliminating the rule may allow tokenized assets to trade alongside traditional securities without violating order-routing rules. Specific tokens or digital assets were not highlighted during discussions, but the implications could be far-reaching.
#What implications does this have for investors?
If the commission moves forward with the vote, this step is only the beginning. The proposal would initiate a public comment period preceding any final changes to the rule. The SEC is clearly signaling its intent under Chairman Atkins to dismantle a regulation that he has opposed for over twenty years. This shift could alter how both traditional and digital securities are traded in the U.S., making it essential for investors to stay informed about these developments.