SEC Issues “Innovation Exemption” for Tokenized Securities

Summary

On September 17, 2026, the Securities and Exchange Commission issued two five-year, conditional exemptions to facilitate the permissioned trading of “Tokenized NMS Stock” through automated market makers (“AMMs”) and liquidity pools (together, “AMM Liquidity Pools”):

• an exemption from the definition of “exchange” for Tokenized Securities Venues (“TSVs”); and

• an exemption from the definition of “dealer” for certain liquidity providers in an AMM Liquidity Pool that supplies liquidity to the liquidity pool in the form of Tokenized NMS Stock.

Together, these exemptions allow certain venues that use AMM Liquidity Pools to facilitate trading tokenized versions of certain listed U.S. stocks without registration as a national securities exchange or alternative trading system, while also permitting liquidity providers to deposit tokenized stock into those AMM Liquidity Pools without registering as dealers, in each case subject to several conditions and limitations as discussed below. The Innovation Exemption is effective immediately. The SEC is requesting comment on all aspects of the Innovation Exemption.

Background

The two exemptions (together, the “Innovation Exemption”) were issued by the SEC pursuant to its statutory authority under Exchange Act Section 36(a)(1) to “conditionally or unconditionally exempt any person, security, or transaction … from any provision or provisions of [the Exchange Act] or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.”[1] The exemptive order describes the Innovation Exemption as “an interim, targeted measure to facilitate the trading of Tokenized NMS Stock using distributed ledger technology . . . while the [SEC] considers the need for future rulemaking or other related actions.”[2]

The Innovation Exemption builds on several prior actions by the SEC to address the application of the federal securities laws to crypto asset markets, most notably SEC staff statements relating to tokenization[3] and the application of federal securities laws to certain web interfaces used to provide access to crypto asset trading platforms.[4]

Positions taken by the SEC under its prior leadership had raised questions regarding whether or when an AMM Liquidity Pool offering trading in tokenized securities may be required to register with the SEC as a national securities exchange or alternative trading system (“ATS”).[5] As noted in the order, several of the requirements imposed on national securities exchanges and ATSs would present significant challenges for an entity offering Tokenized NMS Stock on an AMM Liquidity Pool.[6] Examples cited by the SEC include the trade-through prohibition of Regulation NMS Rule 611 and quotation display, dissemination and attribution requirements of Regulation NMS Rule 602(e),[7] which require linkages with other trading venues and market utilities not integrated with blockchain technology. Likewise, prior agency positions had raised questions regarding whether or when liquidity provider activities on an AMM Liquidity Pool trigger registration under the Exchange Act as a dealer.

Key Implications

The Innovation Exemption seeks to clarify and address the questions and issues under the existing framework and guidance, but its scope is relatively narrow and it includes several meaningful limitations:

• Limited Duration: As noted above, both exemptions are limited to five-year terms, expiring on September 17, 2031.

• Permissioning; OFAC Compliance: The Innovation Exemption requires that access to TSVs be permissioned and that the TSV be a U.S. person who must comply with OFAC prohibitions and requirements.

• Limited to AMMs: The Innovation Exemption appears not to cover trading of Tokenized NMS Stock on a standalone central limit order book protocol, because it is limited to AMMs. However, the order expressly provides that a TSV operating under the order’s exemption for TSVs may offer TSV Participants the use of non-firm trading interests, such as indications of interest and requests for quotes.

• Limited Securities: Because all offers and sales of Tokenized NMS Stock must comply with the Securities Act of 1933 and provide holders equivalent rights and privileges as the underlying NMS stock,[8] some popular tokenization structures deployed outside of the United States – such as “synthetic” stock taking the form of equity-linked debt or derivatives – will not be eligible.[9]

• Limited Symbols and Volume: TSVs operating under the exemption will be subject to limitations on the number of symbols and volume of Tokenized NMS Stock they are permitted to trade, as summarized below.

• Issuer Opt-Out: A TSV will be required to notify the issuer of the underlying NMS stock prior to offering any Third Party-Tokenized Stock (as defined below) and provide the issuer an opportunity to object to the TSV’s listing of the Third Party-Tokenized Stock.

A TSV would also be subject to conditions relating to prior SEC notification and public disclosures regarding detailed aspects of its operations, public transaction transparency, compliance with trading halts, notifications to the SEC and its participants of significant operational events, a prohibition on financing activities, a prohibition on misrepresenting the TSV’s regulatory status, and books and records requirements, as discussed below.

A registered entity may operate an affiliate as a TSV, but the operation of the TSV affiliate must be kept separate from any registered activity. The Innovation Exemption does not provide any relief to registered entities transacting on a TSV. For example, a broker-dealer transacting on a TSV would remain subject to best execution and reporting requirements like it would for other over-the-counter transactions.

Notably, the Innovation Exemption does not address the status of decentralized trading protocols that do not comply with these conditions, such as a protocol lacking control by an identifiable operator.[10] Neither does it address the securities law status of liquidity provider tokens that represent an entitlement to the securities and fees associated with an AMM Liquidity Pool.

We discuss specific implications for public companies in the section “Implications for Issuers of Publicly Traded Securities” below.

Tokenized NMS Stock

The order defines a “Tokenized NMS Stock” to mean an NMS stock that is either: (i) a security tokenized by, or on behalf of, the issuer of the underlying NMS stock (“Issuer-Tokenized Stock”) or (ii) a security tokenized by a third party that is unaffiliated with the issuer of the underlying NMS stock (“Third Party-Tokenized Stock”), but excluding Third Party-Tokenized Stock that represents a security distinct from and provides synthetic exposure to an underlying security.[11] This definition of Tokenized NMS Stock generally aligns with the taxonomy of tokenized securities provided in the “Statement on Tokenized Securities” published by SEC staff in January 2026, with “Linked Securities” and tokenized “Security-Based Swaps” discussed in that guidance excluded from the Tokenized NMS Stock definition.[12]

TSV Exemption

The order defines a “Tokenized Securities Venue” or a “TSV” as an organization, association, or group of persons that brings together buyers and sellers of Tokenized NMS Stock by:

• Providing one or more AMM Liquidity Pool(s) for permissioned participants to interact and agree to terms of a trade; and

• Setting standards for persons to access trading on such AMM Liquidity Pool(s).

Pursuant to the TSV Exemption, a TSV may, without constituting an “exchange”[13] under the Exchange Act (i.e., without being subject to SEC registration and other requirements applicable to exchanges under the Exchange Act and SEC rules, including rules under Regulation NMS), provide[14] one or more AMM Liquidity Pool(s) to its users and liquidity providers (“TSV Participants”), subject to the following conditions and limitations (among others):

• TSV Participants: The TSV must set standards for persons permitted to access trading on an AMM Liquidity Pool it provides that allow only permissioned TSV Participants to access trading and to buy and sell Tokenized NMS Stock on the TSV.[15] A TSV may enforce its permissioning criteria through the use of distributed ledger applications, such as allow-lists (also referred to as “white-lists”) of permitted TSV Participant wallet addresses and blockchain-enforced controls allowing transfers of Tokenized NMS Stock only to wallet addresses of persons that meet the TSV’s credentialing requirements.

• Token Limitations: The TSV only makes available for trading a Tokenized NMS Stock that is trading in a pair with another Tokenized NMS Stock, a non-security crypto asset (e.g., a payment stablecoin issued by a permitted payment stablecoin issuer under the GENIUS Act), or a tokenized money market fund. Any non-security crypto asset[16] or tokenized money market fund must be directly paired with and traded alongside a Tokenized NMS Stock to be eligible for trading on a TSV. Accordingly, TSVs relying on the TSV Exemption would not be permitted to offer liquidity pools consisting of a pair of non-security crypto assets (e.g., USDC / BTC, BTC / ETH, etc.).[17]

• Limitations on Execution Methods: The TSV Exemption only covers trading of Tokenized NMS Stock executed by an AMM, so appears to be inapplicable to trading of Tokenized NMS Stock on a central-limit order book distributed ledger protocol. However, the order expressly provides that a TSV operating under the TSV Exemption is not limited to using only orders and may offer TSV Participants the use of other trading interest, such as indications of interest or requests for quotes.

• Secondary Sales Only: No primary issuance or initial offerings of securities are permitted on a TSV under the TSV Exemption, and all offers and sales of Tokenized NMS Stock under the TSV Exemption must be registered under the Securities Act or conducted pursuant to an exemption from the registration requirements of the Securities Act.

• Rights of Holders: A TSV is required to verify that the Tokenized NMS Stock it makes available for trading provides holders the same rights and privileges as a traditional NMS stock of an equivalent class. The order specifies that a Tokenized NMS Stock would be deemed to provide the same rights and privileges if, among other things, it conveys (i) the same interest in the company that holders of the underlying NMS stock have, (ii) a right to receive the same dividends that the company issues to holders of the underlying NMS stock, (iii) a right to exercise the same voting rights that holders of the underlying NMS stock may exercise, and (iv) a right to receive the same share of the residual assets of the company upon liquidation as holders of the underlying NMS stock receive.[18]

Symbol and Volume Limitations

A TSV relying on the TSV Exemption is subject to limitations on the number of symbols and volume traded on the TSV based on a tiering structure,[19] as summarized in the table below:

The first time a TSV exceeds a volume threshold in a Tokenized NMS Stock, it will not be required to take any action. However, in each subsequent instance that a TSV exceeds the volume threshold for a given Tokenized NMS Stock, the TSV will be required to immediately pause trading in such Tokenized NMS Stock for three months. Additionally, a TSV must notify its TSV Participants each time that it pauses trading in a Tokenized NMS Stock and must accordingly amend its public notice (discussed below) within five business days.

• Restriction on Leverage: A TSV may not engage in financing activities, such as extending credit to a TSV Participant by allowing the TSV Participant to trade on margin. A TSV also may not borrow or hypothecate, through any means, securities or non-security crypto assets on the TSV. The order does not address the permissibility of linkages between a TSV and onchain asset lending protocols, nor the status of those protocols, other than prohibiting a TSV from arranging or permitting the hypothecation of assets on the TSV.

• Distributed Ledger Applications: The distributed ledger applications (i.e., smart contracts) used by a TSV must be auditable, public, and deployed on a public, permissionless[22] distributed ledger. This condition on the availability of the TSV Exemption is intended to enhance TSV transparency, support market integrity and reduce systemic and operational risk by enabling participants and third parties to audit and report vulnerabilities and assess the risks of trading on a particular TSV.

• Transaction Transparency: A TSV must make U.S. dollar-denominated data concerning transactions freely and publicly available in machine-readable format for all transactions within the past 30 days, and must update its transaction data within 10 minutes of the occurrence of any transaction. The TSV’s published transaction data must include the symbols for each Tokenized NMS Stock and paired asset, the transaction price, the transaction size, the transaction time and the transaction direction. The TSV must also provide information pertaining to the AMM Liquidity Pool and its smart contract address, daily asset pair share volume and end-of-day size of the AMM Liquidity Pool per asset pair.

• Trading Halts: A TSV must stop trading in a Tokenized NMS Stock concurrently with any stoppage of trading in the underlying NMS stock on its primary listing exchange (including a halt or suspension). A TSV must immediately notify its TSV Participants of any stoppage of trading.

• Significant Operational Events: A TSV must immediately notify its TSV Participants upon having a reasonable basis to conclude that the event has occurred and promptly notify the SEC of any event that has a significant impact on the operation of the TSV or on its participants, such as a disruption or intrusion to the TSV’s systems. A TSV must also remedy any known significant operational event as soon as reasonably practicable and notify its TSV Participants of the remediation.

• Issuer Notices and Notice of Issuer Objection: At least 30 calendar days prior to making available a Third Party-Tokenized Stock for trading, a TSV must provide written notice to the issuer of the underlying NMS stock (“Issuer Notice”). If the issuer provides written notice to the TSV, on or prior to the 30th calendar day following receipt of the Issuer Notice, that it objects to the Third Party-Tokenized Stock being made available for trading on the TSV (“Notice of Issuer Objection”), the TSV may not make such Third Party-Tokenized Stock available for trading on the TSV.

• Public Notices: The TSV must publish on its website a notice prior to operating under the TSV Exemption and periodically revise the notice thereafter: (i) upon commencing or ceasing making any Tokenized NMS Stock available for trading, pausing or resuming trading in connection with the TSV Exemption’s volume thresholds or receiving a Notice of Issuer Objection; (ii) prior to any material change to its operations or prior disclosures; (iii) following the end of any calendar quarter describing non-material changes to its operations or disclosures; and (iv) after discovering any materially inaccurate or incomplete information in any previous notice.

As further detailed in the order, the notice must include information designed to help market participants understand how to access and trade on a TSV and protect their interests, including:

• disclaimers regarding the TSV’s regulatory status and its use of the TSV Exemption,

• an overview of the TSV, its business and its ownership and/or governance structure,

• the TSV’s non-exempt activities,

• the TSV’s criteria or standards for permissioning and eligibility standards for TSV Participants (including identity verification procedures),

• identification of the Tokenized NMS Stocks and non-security crypto assets and tokenized money market funds the TSV makes available for trading,

• description of the Tokenized NMS Stocks traded on the TSV, including whether they are Issuer-Tokenized Securities or Third Party-Tokenized Securities, the tokenization process and the TSV’s procedures for diligencing their legal, technical and operational features,

• discussion of any trading activities of the TSV and/or its affiliates on the TSV,

• description of the distributed ledger technology and AMM Liquidity Pool trading procedures used by the TSV,

• description of the TSV’s fee structure and other forms of compensation,

• description of the TSV’s information security, system safeguards and trading oversight policies and procedures (including policies and procedures designed to address maximal extractable value),[23]

• description of the TSV’s clearing procedures and arrangements and other service providers,

• description of any known material risks to TSV Participants or the integrity of the TSV’s market and actions the TSV has taken to mitigate such risks, and

• certain other items discussed in the order

• U.S. Person: A TSV must be a U.S. person in order to rely on the TSV Exemption.[24]

• Representations: A TSV relying on the TSV Exemption may not make any statements indicating that it is registered with the SEC or that its activities have been approved or endorsed by the SEC. The TSV must affirmatively disclose in its public notice that it is not registered with the SEC.

• Books and Records: A TSV must make and keep current trading records and information related to compliance with the conditions of the TSV Exemption, as specified in the order. The TSV must preserve all such books and records while the TSV Exemption is effective and for a period of three years thereafter, and must make such records available to SEC staff promptly upon request. The TSV Exemption permits a TSV to maintain such records on a distributed ledger so long as they can be readily accessed by the SEC in a human-readable format and usable electronic format.

Covered Firm Exemption

The order defines a “Covered Firm” as any liquidity provider in an AMM Liquidity Pool that supplies liquidity in the form of Tokenized NMS Stock using proprietary capital and that may also be engaged in additional activities that are indicia of dealing activity,[25] such as quoting pricing to customers or entering into agreements to provide committed capital. In the order, the SEC recognized that liquidity provision alone does not constitute engaging in dealer activity, but that, depending on facts and circumstances, certain liquidity provider activity may raise questions regarding whether such activities constitute dealer activity (as opposed to trader activity excluded from the Exchange Act’s “dealer” definition).

Accordingly, the Covered Firm Exemption provides a temporary, conditional exemption from the “dealer”[26] definition under Section 3(a)(5) of the Exchange Act, solely within the limited context of AMM Liquidity Pools operating pursuant to the TSV Exemption, subject to the following conditions and limitations:

• TSV Provided AMM Liquidity Pool: A Covered Firm’s securities activities must be limited to activities related to the trading of Tokenized NMS Stock in one or more AMM Liquidity Pools operating pursuant to the TSV Exemption discussed above.[27]

• Proprietary Accounts: A Covered Firm must provide liquidity through a TSV, must engage in such trading activity solely for its own account and must not hold or custody customer assets.

• Recordkeeping: A Covered Firm must make and maintain records relating to its financial capacity, liquidity provision (including market making) agreements or understandings with a TSV and any incentives, fees, rebates or other form of compensation received for its liquidity provision activities.

• Disclosures: A Covered Firm must prominently disclose on its website, as applicable, that it is not registered with the SEC as a broker-dealer, that it may enter into liquidity provision agreements or arrangements with a TSV and that it may receive fees, tokens or other incentives for providing liquidity or achieving certain volume thresholds from a TSV-provided AMM Liquidity Pool.

• Notification: A Covered Firm must notify the SEC in writing of its role as a Covered Firm, including its name, business model, an overview of its risk controls and certain other information specified in the order.

Implications for Issuers of Publicly Traded Securities

Issuers of publicly traded securities should be aware of these new exemptions, as they allow certain permissioned blockchain-based trading venues to trade tokenized versions of certain listed U.S. stocks for five years without registering as securities exchanges. Notably:

• The exemptions do not generally impose new disclosure or compliance obligations on public company issuers or require these companies to tokenize their stock, although public companies may seek to tokenize their own stock.

• Any eligible tokenized stock—whether created by an unaffiliated third party or by the issuer—must provide holders with the same economic and governance rights as the corresponding traditional stock, including equivalent dividend, voting and liquidation rights.

• Before a venue may offer a tokenized version of a public company’s stock created by an unaffiliated third party, it must give the public company issuer at least 30 days’ written notice. The public company issuer may prevent the token from being offered by objecting in writing within that period.

• Even though third-party sponsored tokenized products are not new, public companies should consider establishing a process for evaluating these notices, including potential investor-relations, governance and operational considerations, and responding before the 30-day deadline if they wish to opt out.

115 U.S.C. § 78mm(a)(1).(go back)

2 Order Granting Temporary Conditional Exemptive Relief for Certain Distributed Ledger Trading Venues and Liquidity Providers for Tokenized NMS Stocks, and Request for Comment, Exchange Act Release No. 34-106402 (Sept. 17, 2026), https://www.sec.gov/files/rules/exorders/2026/34-106402.pdf; see also SEC, Press Release, SEC Issues “Innovation Exemption” to Facilitate the Trading of Tokenized NMS Stock and Request for Comment (Sept. 17, 2026), https://www.sec.gov/newsroom/press-releases/2026-90-sec-issues-innovation-exemption-facilitate-trading-tokenized-nms-stock-request-comment.(go back)

3 See Division of Corporation Finance, Division of Investment Management and Division of Trading and Markets, Statement on Tokenized Securities (Jan. 28, 2026), https://www.sec.gov/newsroom/speeches-statements/corp-fin-statement-tokenized-securities-012826-statement-tokenized-securities.(go back)

4 See Division of Trading and Markets, Staff Statement Regarding Broker-Dealer Registration of Certain User Interfaces Utilized to Prepare Transactions in Crypto Asset Securities (Apr. 13, 2026), https://www.sec.gov/newsroom/speeches-statements/staff-statement-regarding-broker-dealer-registration-certain-user-interfaces-utilized-prepare-staff-statement-regarding-broker-dealer-registration-certain-user-interfaces-utilized.(go back)

5 See, e.g., Proposed Rule, Amendments Regarding the Definition of “Exchange” and Alternative Trading Systems (ATSs) That Trade U.S. Treasury and Agency Securities, National Market System (NMS) Stocks, and Other Securities, Exchange Act Release No. 34-94062 (Jan. 26, 2022), 87 Fed. Reg. 15496 (Mar. 18, 2022) (proposing amendments to expand the definition of “exchange” in Exchange Act Rule 3b-16 to include systems that offer the use of non-firm trading interest and communication protocols); Supplemental Information and Reopening of Comment Period for Amendments Regarding the Definition of “Exchange”, Securities Exchange Act Release No. 34-97309 (Apr. 14, 2023), 88 Fed. Reg. 29448, 29453 (May 5, 2023) (“Accordingly, depending on the facts and circumstances, activities performed today using so-called ‘‘DeFi’’ trading systems could meet the criteria of existing Rule 3b–16 and thus constitute exchange activity.”); see also Uniswap Labs, Uniswap Labs Responds to SEC Wells Notice (Apr. 10, 2024), https://blog.uniswap.org/fighting-for-defi (disclosing receipt of a Wells notice from the SEC’s Enforcement Division).(go back)

6 An AMM is a system of smart contracts that enables trading against a “liquidity pool” consisting of a pair of crypto assets. The smart contracts automatically determine and enforce execution prices of trades based on the amounts of each crypto asset in the pool relative to the other, as well as other terms of the liquidity pool and trades executed on the AMM.(go back)

7 See 17 C.F.R. § 242.602(a), 611. The SEC proposed to rescind Regulation NMS Rule 611 (the trade-through rule) on June 11, 2026. See Securities Exchange Act Release No. 105655 (June 11, 2026), 91 Fed. Reg. 36656 (June 17, 2026).(go back)

8 “NMS stock” means any NMS security other than an option. 17 C.F.R. § 242.600(b)(65). “NMS security” means any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options. 17 C.F.R. § 242.600(b)(64).(go back)

9 Additionally, the order also does not provide any exemption for purposes of the Investment Company Act of 1940, such that the Innovation Exemption will not apply to tokenized investment companies such as tokenized money market funds or tokenized exchange-traded funds.(go back)

10 See Statement by Commissioner Hester M. Peirce, Slumber Number: Innovation Exemption Statement (Sept. 17, 2026), https://www.sec.gov/newsroom/speeches-statements/peirce-slumber-number-innovation-exemption-statement-091726 (“What does the order not do? This order is not about decentralized finance. Truly decentralized systems that are driven by automated software do not give rise to the foundational concerns underlying securities regulation, namely that an intermediary you trust to act on your behalf will be foolish, careless, or compromised. An investor does not need an exemption to avail herself of permissionless smart contracts that mediate peer-to-peer trading.”)(go back)

11 The order also provides that tokenized rights and warrants are not eligible for trading on a TSV.(go back)

12 See Division of Corporation Finance, Division of Investment Management and Division of Trading and Markets, Statement on Tokenized Securities (Jan. 28, 2026), https://www.sec.gov/newsroom/speeches-statements/corp-fin-statement-tokenized-securities-012826-statement-tokenized-securities.(go back)

13 The Exchange Act defines an “exchange” as “any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as that term is generally understood, and includes the market place and the market facilities maintained by such exchange.” 15 U.S.C. § 78c(a)(1).(go back)

14 The order states that a TSV “provides” an AMM Liquidity Pool when it designates or controls an AMM Liquidity Pool as the means and location for trading Tokenized NMS Stock. The order further notes that a TSV may “control” an AMM Liquidity Pool by deploying an AMM smart contract for trading a pair of assets, setting or altering the rules or parameters of the pool, determining fees for the pool and/or having the ability to pause trading in the pool.(go back)

15 The order identifies active, offchain management and onchain protocols as examples of identity verification or eligibility screening processes a TSV may employ.(go back)

16 The order defines a “non-security crypto asset” as a crypto asset that itself is not a security.(go back)

17 The Innovation Exemption would therefore not cover TSVs offering the trading of Tokenized NMS Stock on the same platform as non-security crypto assets (except to the extent they are directly paired with Tokenized NMS Stock on an AMM Liquidity Pool). It also would not permit TSVs to offer trading of Tokenized NMS Stock on the same platform as other securities, such as traditional securities or tokenized securities other than Tokenized NMS Stock, because it requires entities registered with the SEC for securities activity unrelated to a TSV to “keep any registered activity separate from the operation of the TSV.”(go back)

18 For example, a TSV may only make available for trading a Third Party-Tokenized Security if the third party distributes or otherwise makes available to holders of the Tokenized NMS Stock any related proxy materials or other issuer communications at no cost to the issuer or shareholders.(go back)

19 The tiering structure for Tokenized NMS Stock reflects the tiering structure for NMS stock under the National Market System Plan to Address Extraordinary Market Volatility (i.e., the Limit-Up, Limit-Down Plan).(go back)

20 When calculating the number of symbols traded for purposes of compliance with the TSV Exemption, a TSV must aggregate its number of symbols traded with the number of symbols traded by its affiliated TSVs.(go back)

21 The volume limitations in the order are in terms of the average daily share volume during the prior month in the relevant NMS stock as reported by an effective transaction reporting plan (i.e., the Consolidated Tape Association Plan / Consolidated Quotation Plan and the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation, and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privilege Basis) for inclusion in the securities information processor. For purposes of calculating the average daily share volume during the prior month for a given security, the average daily share volume of a given Tokenized NMS Stock traded on the TSV would be the numerator and the average daily share volume of the NMS stock (as reported by an effective transaction reporting plan) would be the denominator.(go back)

22 The order defines “permissionless” as generally meaning that anyone can read or write to the distributed ledger without authorization, and notes that a permissioned AMM Liquidity Pool can be deployed on a permissionless blockchain.(go back)

23 Maximal extractable value or “MEV” refers to the fees obtained by validators and other actors through sequencing transactions on a blockchain in order to create a block with the highest fees to validators. The order notes that a TSV’s disclosure of how they address MEV will inform TSV Participants about how their transaction information may be used in a way that adversely impacts the price they receive from trading on the TSV.(go back)

24 The order defines a “U.S. person” as any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.(go back)

25 The order references quoting pricing to customers or entering into agreements to provide committed capital as examples of activities that may constitute indicia of dealing activity.(go back)

26 The Exchange Act defines a “dealer” as “any person engaged in the business of buying and selling securities . . . for such person’s own account through a broker or otherwise,” excluding “a person that buys or sells securities . . . for such person’s own account, either individually or in a fiduciary capacity, but not as a part of a regular business.” 15 U.S.C. § 78c(a)(5).(go back)

27 There is no discussion of hedging activities or proprietary trading activities taking place away from TSVs.(go back)