There are guardrails, however.
The software running that market must be public and auditable and deployed on a public, permissionless blockchain. Access to the trading venue itself, however, remains permissioned, according to the SEC.
So no, this does not mean Apple or Microsoft stocks suddenly start trading freely on popular decentralized crypto exchanges that run on automated liquidity protocols (or smart contracts) rather than traditional order books.
It means regulated venues can test some of the technology pioneered by decentralized finance while still controlling who is allowed to trade.
And this sandbox is also deliberately small.
For the most liquid stocks, each venue can tokenize up to 75 names and handle no more than 0.25% of average daily trading volume. For a second tier of stocks, the cap rises to 250 names and 2.5% of average daily volume, according to Jamie Selway, the SEC’s director of trading and markets.
“The…
