The SEC is weighing a proposal to rescind core parts of Regulation NMS, a four-decade-old rulebook that requires brokers to execute customer orders at the best available price and prevents trading in locked or crossed markets.
Regulation NMS, adopted in 2005, was designed to protect retail investors from poor fills and fragmented pricing. It forces brokers to route orders to whichever exchange offers the best terms at that moment. A locked market occurs when the ask on one venue matches the bid on another, with no spread between them. Crossed markets happen when the bid exceeds the ask, a situation the rule prohibits.
Robinhood and crypto-focused trading platforms argue these protections prevent them from launching tokenized equity products. In tokenized trading, assets exist on blockchain rails rather than traditional settlement systems. According to Bloomberg and Reuters reporting on the SEC's proposal, loosening Regulation NMS would clear a regulatory path for these platforms to offer such products without threading through the existing market structure.
CoinDesk reported that the SEC's proposal to rescind the trade-through and locked/crossed market rules is "likely to face resilience of the full rule" in practice, meaning compliance pressure may persist even if the SEC formally withdraws the mandate. The proposal appears in a JD Supra filing that tracks the agency's regulatory moves.
The timing matters. Crypto platforms see tokenized stocks as a high-volume revenue opportunity. Traditional brokers, exchanges, and institutions built around current market rules face potential operational shifts if those guardrails disappear. Retail investors who relied on Regulation NMS protections to prevent bad fills would lose that explicit safeguard, though brokers could voluntarily continue offering similar protections under other regulatory hooks.
The SEC has not yet voted on rescission. The proposal is in its public comment period, a stage where market participants, law firms, and advocacy groups typically weigh in before the agency decides whether to move forward. That comment window is typically 60 days, though the SEC can extend it.
What's less clear from available reporting is whether the SEC views Regulation NMS as genuinely blocking tokenization or whether industry players are using it as a negotiating point to reshape market structure more broadly. The agency has been gradually warming to crypto asset classes over the past two years, but formal rule removal remains a high bar.