newsfilter
← Latest News
SEC Press Releases·

SEC Issues “Innovation Exemption” to Facilitate the Trading of Tokenized NMS Stock and Request for Comment

  • The SEC granted temporary, conditional exemptive relief to Tokenized Securities Venues (TSVs) to operate without being classified as an "exchange" under the Securities Exchange Act of 1934.
  • This "Innovation Exemption" allows TSVs to trade tokenized National Market System (NMS) stock using permissioned automated market makers & liquidity pools.
  • The relief is temporary & will expire five years after the order's publication.
  • TSVs must verify that tokenized NMS stocks provide holders with the same rights & privileges as traditional NMS stock.
  • TSVs are subject to limits on the number of trading symbols & volume traded.
  • TSVs must provide written notice & an opportunity for the underlying issuer to object before trading tokenized NMS stock issued by an unaffiliated third party.
  • Smart contracts used by TSVs must be auditable, public, & deployed on a public, permissionless distributed ledger.
  • Trading of tokenized NMS stock on a TSV must stop concurrently with any trading stoppage of the underlying stock on its primary listing exchange.
  • TSVs must provide public notice regarding their operations, trading activities, & the activities of their affiliates.
  • Liquidity providers in AMM Liquidity Pools using proprietary capital are also temporarily exempt from the definition of "dealer" under section 3(a)(5) of the Exchange Act.
  • The SEC is soliciting public comment on the exemption & potential future changes to facilitate onchain trading.