Overview
- The SEC published an Innovation Exemption that lets Tokenized Securities Venues use permissioned automated market makers and on-chain liquidity pools to match buyers and sellers of tokenized National Market System stocks without registering as an exchange.
- The order requires tokenized shares to carry the same shareholder rights as traditional stock and forces a formal issuer notice with a 30-day window that lets the company block a third party from listing its shares.
- Smart contracts must be public and auditable on a permissionless blockchain, venues must halt token trading whenever the underlying share is halted on its primary exchange, and each TSV faces limits on symbols and trading volume.
- Certain liquidity providers that supply proprietary capital to approved AMM pools receive conditional five-year relief from dealer-registration rules, and platforms that meet the TSV definition must file notice with the SEC before operating.
- Issued on Sept. 17 as a time-limited pilot, the exemption opens a controlled path for faster settlement and extended trading hours but the SEC is soliciting public comment and holding roundtables to decide whether to make the framework permanent.