SEC's Tokenized Stock Experiment Hits Trading Pause Bump

The SEC's experimental Tokenized Securities Venues (TSVs) framework has introduced a rule that could pause trading of tokenized stocks for three months. The rule applies to repeat breaches of a stock's trading volume limit, which is measured against traditional stock market activity.

The volume allowance varies depending on the type of security and its market cap. For Tier 1 securities, which include S&P 500 and Russell 1000 stocks, the maximum symbols across affiliated exchanges is 1750, with a per-stock volume threshold of 25% of the traditional stock's prior-month average daily share volume.

The SEC has also allowed a five-year test of trading through automated market makers on these TSVs. This system allows for automatic trading against a pool of assets supplied by other participants, but it still requires capital and connectivity between markets.