Three Themes to Watch: Tokenization, Reg NMS Overhaul, and 24/5 Trading

Last month’s STANY conference delved into issues and trends that are reshaping the future of capital markets, such as anticipated changes to Reg NMS, building the rails for digital assets, tokenization, and preparing the pipes for 24/5 trading. Here are three takeaways from the panels that could play out in 2026 and beyond.

Convergence: Tokenized Assets, Equities and Digital Rails

If there was one theme that stood out – it was the convergence between traditional finance and digital assets that is under way, though it would take several years to play out.

Many panelists referenced a friendlier regulatory environment and guidance from the SEC as the reason brokers are taking steps to provide tokenized assets and crypto or digital assets to their clients.

Earlier this year, the SEC wrote that broker dealers could hold crypto assets in their brokerage accounts. “You’re seeing the convergence of the crypto ecosystem and the broker dealer universe that will allow these assets to be held in brokerage accounts,” said the founder and co-CEO of a market infrastructure provider in digital assets.

In March, the SEC and CFTC issued guidance and a taxonomy on distinct categories of crypto assets and affirmed that digital securities, or tokenized securities are securities. On April 13, the SEC issued guidance on digital wallets – explaining that a wallet that provides an interface to on-chain assets, does not need to register as a broker for the next five years.

At STANY, market observers noted there’s been a shift in momentum among large broker dealers that can move at speed to roll out initiatives.

• Morgan Stanley’s head of digital asset strategy highlighted its partnership with Zero Hash to bring spot crypto trading to its clients through E*Trade. In addition, both firms said they have applied for an OCC trust license, which will give them the ability to issue Stablecoins and hold digital assets in retirement accounts, officials said.
• Depository Trust and Clearing Corporation (DTCC) said it’s launching a tokenization service later this year under a three-year pilot. DTCC will allow brokers to tokenize equities held in its repository (through a mint and burn process) and put them in a wallet of their choosing on a level one blockchain network.
• NYSE and Nasdaq said they plan to offer tokenized trading of US equities tied to the same symbol and CUSIP number that will sit in the same order book, with clearing and settlement through DTCC.
• The SEC is working on an “innovation exemption” that could let certain “non-registrants” trade NMS securities.

Why this Matters: “There’s a huge competitive threat coming from digital asset exchanges, which trade differently than traditional finance,” said an OTC markets operator. But there’s an opportunity for broker dealers to offer digital assets which are not securities to their customers. “They want an enterprise-grade service solution within highly regulated broker-dealers,” said the market operator.

Evolving Equity Market Rules: OPR, Access Fees, and Tick Size Rules

2026’s second half is shaping up to be year of equity market structure changes in Reg NMS with implications for access fees and tick size rules.

In a keynote speech, Jamie Selway, the SEC’s Director of the Division of Trading and Markets, said the agency continues to review Reg NMS, “implemented 20 years ago — and it sorely needs modernization in the view of many.” 

Panelists debated a March 31 proposal from MEMX LLC for exemptive relief from compliance with access fee (Rule 610) and tick-size rule (Rule 612) changes scheduled for November 2026 – until after the SEC decides what it wants to do with the Order Protection Rule (OPR), known as Rule 611.

Under Reg NMS changes approved in September 2024, access fee caps are moving from 30 mils down to 10 mils access fee cap this November alongside lowering tick sizes from one penny to half penny across 1, 800 stocks.

Why it Matters: Industry participants expect changes this year in the OPR, ranging from a full repeal to reform, with a proposal in Q3 or Q4. But this impacts a host of auxiliary rules entwined with OPR such as access fees, tick size and locked and crossed markets. What comes next with or without OPR was up for debate at STANY. Exchanges want a more level-playing field with ATSs which can segment order flow and offer hosted rooms, also citing single dealer platforms which can choose their counterparties.

The topic of tokenization came up and how that fits in with routing orders to the venue with the best price. In a fireside chat, Selway said, “best execution is very prescriptive with a rule like 611 which directs order routing; that won’t scale well with tokenization or 24/7.”

A market maker who favors changes to OPR said the SEC needs to adapt to where the markets are headed. “If a broker is trading on Coinbase and sees a better price on Kraken and needs to prefund the trade with Stablecoin or move collateral, this may be unworkable,” said a leading market maker.

24-Hour Trading Nears Reality

A panel titled “24-hour trading: It’s an Hour Away” examined the progress of 24/5 trading and the infrastructure gaps that must be addressed before major exchanges can participate in the overnight session.

Today, overnight trading driven by overseas investors takes place primarily on three alternative trading systems: Blue Ocean ATS, Moon ATS, and Bruce ATS. Although overnight activity accounts for less than 1% of daily trading volume, panelists expect it to expand further once exchanges enter the market—provided the necessary infrastructure upgrades are completed.

The NYSE is ready to launch 24/5 trading, but it needs the clearinghouse to operate overnight, an exchange executive said. Last year, DTCC extended its hours until 1:30 a.m. In the next phase, it will move toward a 24/5 cycle in June.

Because exchanges must publish prices to the public, they need the securities information processor (SIP) to upgrade its equity data infrastructure for 24-hour operation. The SIP has set a Dec. 6 deadline, but some exchanges are skeptical it will be ready on time.

On the panel, 24X Exchange’s CEO discussed the company’s request for a temporary, conditional SEC exemption that would allow it to launch 23/5 trading before the SIP consolidated data is available. The SEC has published the request and is reviewing comments from market participants. If approved, 24X said it would go live in June, operating Sunday through Thursday from 9 p.m. to 4 a.m. ET.

Debate intensified when 24X CEO Dmitri Galinov argued that, because exchanges are not yet operating overnight, retail order flow is being routed to dark pools that offer less transparency and fewer investor protections than regulated exchanges.

A Blue Ocean executive said the firm operates a lit ATS with fully displayed quotes and trades about 150 million shares each night. Its market data reaches roughly 140 recipients across 30 countries and 60 subscribers.

Each ATS has its own independent data feed, and ATSs said they route orders to at least one other ATS. Consuming all the prices has been an effort for certain firms, noted Bruce Market’s CEO Jason Wallach, but he said given demand and sophistication, that’s the direction the market is going in. Recently, vendors have launched aggregated data-feed platforms that provide a top-of-book view across all three ATSs.

Why it’s important: Overnight trading has attracted overseas investors in Asia, but the buy side is generally opposed to these initiatives, noted a panelist. The reason is they want conventions around closing prices and processes to manage corporate actions. It will take cooperation to develop standards around benchmarks, market integrity, handling news releases, and trading halts before the buy-side invests and hires staff on the desk managing risk 24 hours a day.