Key facts
- The SEC has proposed rescinding its 20-year-old order protection rule.
- This rule change aims to remove a barrier for automated market makers (AMMs) trading tokenized U.S. equities on-chain.
The U.S. Securities and Exchange Commission (SEC) has put forth a proposal to eliminate its two-decade-old order protection rule. This regulatory shift is anticipated to dismantle a critical structural impediment that has thus far prevented automated market makers (AMMs) from engaging in the on-chain trading of tokenized U.S. equities.
The existing order protection rule, established in 2005, mandates that exchanges must ensure that their customers receive the best available price for their orders, whether that price is available on their own exchange or another national securities exchange. This rule has been cited as a significant hurdle for decentralized finance (DeFi) platforms seeking to integrate tokenized traditional assets.