SEC Grants Conditional Exemption for Trading Tokenized NMS Stocks

The U.S. Securities and Exchange Commission on September 17, 2026 issued temporary, conditional exemptive relief for Tokenized Securities Venues that trade certain tokenized National Market System stocks.

The order provides relief from the Exchange Act definition of “exchange,” subject to a range of conditions. It permits eligible venues to use permissioned automated market makers and liquidity pools for trading tokenized NMS stocks.

The SEC’s action does not establish an open-ended exemption. The relief has a defined term, incorporates requirements tied to the underlying securities, and is accompanied by a request for public comment on possible changes and next steps.

What the SEC relief permits

The order applies to Tokenized Securities Venues, or TSVs, that meet its conditions. It allows those venues to facilitate trading in certain tokenized NMS stocks using permissioned automated market makers and liquidity pools.

The relief is focused on the regulatory treatment of qualifying venues under the Exchange Act’s definition of an exchange. Its scope is conditional rather than universal, with eligibility and operational requirements forming part of the exemption.

• Trading is limited to eligible tokenized NMS stocks.
• Permissioned automated market makers and liquidity pools are permitted under the relief.
• The order grants temporary exemptive relief from the Exchange Act definition of “exchange.”

Conditions address rights, trading controls and transparency

The SEC attached conditions addressing the structure and operation of tokenized-stock trading. These include trading limits, equivalent shareholder rights, issuer notice, auditable smart contracts, alignment with underlying-stock trading halts, and public disclosures.

The conditions indicate that the relief is designed around controls connecting the tokenized instrument and venue operations to the status of the underlying NMS stock. Venues seeking to rely on the order must meet the specified requirements rather than treat the exemption as a general authorization for tokenized securities trading.

The emphasis on permissioned liquidity arrangements and auditable smart contracts also places operational transparency among the criteria identified by the SEC. The agency’s requirements are distinct from a conclusion that every tokenized-stock model is covered by the order.

Five-year term and public comment process

The exemptions are set to expire five years after publication. The SEC is soliciting public comment on potential modifications to the relief and on next steps.

The comment request creates a formal avenue for market participants and other interested parties to address how the conditions may work in practice. Any future approach beyond the temporary relief remains subject to the SEC’s consideration.

The decision arrives as market structure discussions continue around on-chain trading and automated execution. Related coverage has examined how on-chain execution is reshaping crypto trading and how the SEC and CFTC have addressed 24/7 trading issues, though the present SEC order concerns tokenized NMS stocks and its own stated conditions.

• The relief is scheduled to expire five years after publication.
• The SEC requested comment on possible modifications and future steps.

Continue reading: on-chain execution is reshaping crypto trading on BTCNews.

Continue reading: the SEC and CFTC have addressed 24/7 trading issues on BTCNews.

Sources

• U.S. Securities and Exchange Commission: SEC Issues “Innovation Exemption” to Facilitate the Trading of Tokenized NMS Stock and Request for Comment

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