SEC Proposes Scrapping 20-Year Trade-Through Rule to Ease Blockchain Integration
The SEC has filed a proposal to rescind Regulation NMS Rule 611, a decades-old safeguard that prevents trades executing at worse prices. The move could open the door to blockchain-based equity trading on Wall Street.
The U.S. Securities and Exchange Commission has initiated a regulatory overhaul aimed at modernizing equity markets for a blockchain era. On June 11, the agency filed a proposal to eliminate Rule 611 of Regulation NMS — a two-decade-old requirement that obligates trading venues to block trades from executing at inferior prices compared to the best quoted prices elsewhere.
Known as the trade-through rule, this protection has long been a cornerstone of equity market structure, designed to protect investors from receiving disadvantageous execution prices when better rates exist in the market. By requiring trading centers to prevent such suboptimal fills, the rule has aimed to ensure price fairness and market integrity.
According to the source, the SEC's proposal targets this rule as a potential barrier to integrating blockchain technology into traditional Wall Street trading infrastructure. The agency's move suggests a regulatory shift toward enabling distributed ledger-based equity trading systems, which operate under different structural constraints than conventional exchanges.
The proposal represents a significant departure from established market protections and signals the SEC's intent to adapt securities regulations to accommodate emerging technologies. However, dismantling long-standing investor protections remains contentious — the rule's elimination could reshape how trades are executed and priced, with implications for both institutional and retail participants.
The SEC's formal proposal now enters a public comment period, during which market participants, exchanges, and advocacy groups may submit feedback before the agency makes a final determination.