SEC Approves Temporary Innovation Exemption for Tokenized NMS Stock Trading

The U.S. Securities and Exchange Commission said tokenization could reduce costs across market infrastructure, including issuance, trading, transfer, settlement, and ownership records, while improving transparency and liquidity. According to ChainCatcher, the SEC approved a temporary, conditional Innovation Exemption that allows tokenized NMS stocks to trade in limited fashion on certain on-chain venues called tokenized securities trading venues. Eligible TSVs may conduct approved trading through automated market makers and liquidity pools, but they must meet requirements for public disclosure, trading transparency, coordinated circuit breakers, recordkeeping, and technical safeguards. The venues are also subject to limits on the number of stock symbols and trading volume. The SEC said the move is intended to observe how on-chain trading venues and market participants operate and to provide data for future long-term regulatory rules.