The SEC’s Innovation Exemption gives qualifying Tokenized Securities Venues a temporary route to trade tokenized National Market System stocks through permissioned automated market makers and liquidity pools. Issued on 17 September, the order creates a bounded operating model for firms developing onchain equity trading. Trading and Markets director Jamie Selway described its five-year experiment on 14 October as a source of evidence for future market-structure recommendations.[1][4]
The relief covers specified exchange and liquidity-provider activity subject to the order’s conditions. Anti-fraud and anti-manipulation provisions remain applicable. Venue access is permissioned even though the smart contracts and transaction ledger must be publicly inspectable.[2][1]
Conditions connect the token to the shareholder’s rights
Core conditions for a Tokenized Securities Venue
| Condition | Required treatment | Market-structure purpose |
|---|---|---|
| US and permissioned operation | The venue must be a US person, set access standards and comply with relevant sanctions obligations. | Keeps participation and operator responsibility identifiable even though the ledger is public and permissionless.Source 2Source 4 |
| Same shareholder rights | The tokenized NMS stock must carry the same rights and privileges as the equivalent traditional class, including dividends and voting rights. | Excludes a price-tracking synthetic from being treated as the same share merely because it references the same ticker.Source 1Source 2 |
| Issuer objection | For an unaffiliated third-party tokenization, the underlying issuer must receive notice and an opportunity to object. | Gives the listed company a route to prevent trading of a tokenized version it has not authorised.Source 1Source 2 |
| Public auditable contracts | Smart contracts must be public, auditable and deployed on a public permissionless distributed ledger. | Makes the operating logic and transaction record inspectable while venue access remains permissioned.Source 1Source 3 |
| Symbol and volume limits | The number of symbols and the amount traded are capped. | Constrains the exemption while the SEC observes how the new market interacts with conventional trading.Source 1Source 3 |
| Coordinated halts | Trading must stop when the underlying stock is halted on its primary listing exchange. | Prevents the tokenized venue from continuing price formation through a halt in the traditional market.Source 1 |
The venue must publish more than a blockchain address
Transparency and records under the experiment
| Measure | Value | Context |
|---|---|---|
| Venue notice | Public description of operations | The venue must disclose its operation and the trading activity of its affiliates on the venue.Source 1 |
| Transaction data | US-dollar price, size, time and pool information | Commissioner Uyeda described regular public data including pool addresses, end-of-day pool size and daily volume.Source 3 |
| Technology safeguards | Books, records and system controls | The exemption is accompanied by recordkeeping and technology conditions rather than relying solely on ledger transparency.Source 3 |
Certain liquidity providers also receive conditional relief from the dealer definition when they commit proprietary capital to the venue’s automated pools. Its scope depends on the covered activity and conditions, making the liquidity-provider role a separate part of structuring a qualifying venue.[1][2]
Building the connection to the existing securities market
Implementation must connect the pool’s trading logic with stock ownership, transfer-agent records, custody, securities lending, Regulation SHO and conventional clearing arrangements. The release does not supply a complete operating design for those connections. Issuers can object to third-party tokenized versions and are under no requirement in the release to create their own tokenized class.[1][2]
The resulting data can show how prices, shareholder rights, halt controls and surveillance operate when the same company’s stock trades through both onchain pools and conventional venues. Selway’s remarks link that evidence to possible further rulemaking; expansion beyond the order’s symbol and volume limits requires further Commission action.[4][3]
The exemptions expire five years after publication. The SEC has invited comments on modifications and next steps; its comment page lists no closing date. A permanent framework remains a later policy decision.[1][2][5]
Sources & further reading
- SEC Issues “Innovation Exemption” to Facilitate the Trading of Tokenized NMS Stock and Request for Comment US Securities and Exchange Commission · 17 Sep 2026 · Accessed 16 Oct 2026
- Statement on the Innovation Exemption: A Bridge Toward Durable Rulemaking US Securities and Exchange Commission — Chair Paul S. Atkins · 17 Sep 2026 · Accessed 16 Oct 2026
- Statement on the Innovation Exemption US Securities and Exchange Commission — Commissioner Mark T. Uyeda · 17 Sep 2026 · Accessed 16 Oct 2026
- How Soon is Now? Remarks at the Security Traders Association’s 93rd Annual Market Structure Conference US Securities and Exchange Commission — Jamie Selway · 14 Oct 2026 · Accessed 16 Oct 2026
- SEC public comment page: Innovation Exemption to Facilitate Trading of Tokenized NMS Stock US Securities and Exchange Commission · Accessed 16 Oct 2026