SEC Moves to Scrap Key Trading Rules to Boost Competition

The SEC is gearing up for one of the most significant overhauls to U.S. market structure in twenty years. On June 11, the regulator proposed eliminating two rules that have governed stock trading since 2005.  They are arguing that protections built for a much slower era are no longer necessary in today’s markets.

The proposal carries implications well beyond traditional finance. Supporters say it could remove a major barrier to tokenized U.S. stocks trading on blockchain networks. That makes it one of the most closely watched stories in crypto markets news this week.

SEC Targets Two Longstanding Trading Rules

The proposal aims Rule 611, the Order Protection Rule and Rule 610(e). That restricts locked and crossed quotes between trading venues. Both were introduced under Regulation NMS in 2005 to ensure investors received the best available price across U.S. exchanges.

Rule 611 prevents a venue from executing an order at a worse price if a better quote exists elsewhere. Rule 610(e) limits situations where bid and ask prices overlap across exchanges. The SEC argues that today’s markets are far faster and more interconnected than they were two decades ago. It makes these requirements largely redundant.

Why the SEC Wants Change

The agency believes the current framework may be doing more harm than good. Regulators argue the rules contribute to market fragmentation by routing trades across multiple venues unnecessarily. The SEC also estimates that scrapping the requirements could save brokerages between $54 million and $77 million annually in compliance costs.

Brokers would still operate under FINRA’s existing “best execution” obligations. It means clients would remain protected, but firms would gain more flexibility in how they fill orders. The proposal now enters a 60-day public comment period before any final ruling.

Crypto Industry Sees Opportunity

The announcement has sparked real excitement in crypto markets news circles, largely because of what it could mean for tokenized equities. Many decentralized finance platforms rely on Automated Market Makers, which use liquidity pools rather than real-time order routing. That makes compliance with Rule 611 genuinely difficult.

Removing the rule could allow tokenized U.S. stocks to trade more freely on blockchain based platforms. Some industry observers have gone as far as calling it one of the biggest regulatory unlocks for on-chain equity trading in years.

Critics Warn About Retail Investor Risks

Not everyone is on board. Critics warn that loosening best-price protections could result in worse execution for retail investors. Trading venues gain more discretion over how orders are filled. Market structure experts have echoed those concerns. Supporters push back, arguing that modern technology combined with existing best-execution standards already provides sufficient protection. Without the added complexity the current rules impose.

What This Means for Developers and Investors

For developers, the proposal opens a potentially significant window for building tokenized stock products and decentralized trading systems. Clearing these regulatory hurdles could meaningfully accelerate innovation in blockchain-based equities and on-chain financial infrastructure.

For investors, increased competition among trading venues could broaden access to tokenized securities though execution quality. That will be watched closely if the rules are eventually repealed.

As the comment period kicks off, Wall Street and the crypto industry will be paying close attention. This is shaping up to be one of the most consequential pieces of SEC news today. With the potential to reshape  traditional markets and decentralized finance for years ahead.

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