SEC Launches Pilot for Tokenized Stock AMM Pools
The SEC's five-year exemption lets qualified Tokenized Securities Venues run permissioned AMM pools for tokenized NMS stocks without exchange registration, while imposing strict transparency and volume caps.
The Securities and Exchange Commission issued a five‑year Innovation Exemption that creates a new, limited pathway for Tokenized Securities Venues (TSVs) to operate automated market‑maker liquidity pools for tokenized National Market System stocks. Eligible TSVs can run permissioned AMM pools without registering as national securities exchanges, broker‑dealers, or alternative trading systems, but they must publish a detailed public notice, disclose ownership, governance, participant eligibility, and maintain a rolling 30‑day public transaction data feed. The pilot caps the number of eligible stocks and overall market‑wide trading volume, imposes strict transparency, anti‑money‑laundering, and sanctions compliance, and requires the underlying equity issuer to be notified and given a 30‑day window to object to third‑party tokenization of its shares. The order also offers limited dealer relief for firms that provide proprietary liquidity to the pools, while preserving existing securities‑law obligations for primary issuances and other activities. Counsel should monitor the notice filing deadline (30 days before operation), assess client eligibility under the permissioned‑access and U.S.‑person requirements, and prepare for the upcoming data‑reporting and scale‑cap compliance tasks. The next development to watch is whether the SEC will expand the pilot or use the generated data to craft broader rulemaking for tokenized securities.