Release 34-106402: the provisions this model runs

To qualify for the TSV Exemption, at least 30 calendar days before operating, a TSV must publish a copy of a notice (“Notice”) prominently on its publicly available website that includes the information described below. Such Notice must be written in plain English and presented in a clear, concise, and understandable manner. Within one business day of the publication of the Notice, the TSV must provide the Commission written notice at [email protected] that it intends to operate pursuant to the TSV Exemption, including the means for contacting the TSV (e.g., an email address and phone number) and the location of the Notice (e.g., website URL). Such Notice will help inform market participants and the Commission about when the TSV begins to operate.

A TSV must, in the same form and location as the initial Notice, publish a revised Notice: (1) within five business days to disclose that it has commenced or ceased making any Tokenized NMS Stock available for trading, paused or resumed trading in connection with the volume thresholds under the TSV Exemption, or received a timely Notice of Issuer Objection; (2) 20 calendar days in advance of any material change to the operations of the TSV or to the disclosures in the Notice; (3) no later than 30 calendar days following the end of any calendar quarter to describe any non-material change to the operations of the TSV or to the disclosures in the Notice; and (4) within five business days of the discovery of any materially inaccurate or incomplete information in the Notice, including in any previous revisions to the Notice.

Pursuant to the TSV Exemption, a TSV must provide the Commission written notice within one business day of publishing any revised Notice on its website. The TSV must maintain all versions of its Notice on its website.

Before making available for trading a Tokenized NMS Stock that is tokenized by a third party unaffiliated with the issuer of the underlying NMS stock, a TSV must provide written notice to the issuer of the underlying NMS stock (“Issuer Notice”). Trading of a Tokenized NMS Stock on the TSV may not commence until at least 30 calendar days from the date when the issuer receives the Issuer Notice.

If the issuer provides, on or prior to the 30th calendar day following receipt of the Issuer Notice, written notice to the TSV that it objects to a Tokenized NMS Stock that was tokenized by a third party unaffiliated with the issuer being made available for trading on the TSV (“Notice of Issuer Objection”), the TSV cannot make such Tokenized NMS Stock available for trading on the TSV. Within five business days, the TSV must amend the public Notice to inform the public that it has received the Notice of Issuer Objection.

An issuer’s ability to object to the trading of a Tokenized NMS Stock that was tokenized by a third party unaffiliated with the issuer on a TSV will enable the issuer of the underlying NMS stock to consider the balance of potential benefits and risks accompanying trading of its Tokenized NMS Stock on a TSV. For example, an issuer of the underlying NMS stock may be concerned about the risk of maintaining its shareholder register related to onchain transfers or the potential price dislocation or adverse effects on the price of the underlying NMS stock, particularly given that prices disseminated by an AMM Liquidity Pool are most likely based only on the ratio of the quantities of assets in that liquidity pool.

A TSV operating under the TSV Exemption that fails to provide Issuer Notice, or makes available for trading the Tokenized NMS Stock of an issuer that has delivered a Notice of Issuer Objection to the TSV in the manner set forth above, would not meet the conditions of the TSV Exemption with respect to trading such Tokenized NMS Stock.

Footnote 63: Issuer Notice must be sent to the physical or email address for the issuer’s principal executive offices listed on the cover page of the issuer’s Exchange Act reports. Issuer Notice must include the TSV’s current and accurate contact information for the issuer to provide any notice of its objection.

Footnote 64: A TSV can obtain confirmation of whether and when an issuer received an Issuer Notice by, for example, requesting a return receipt/proof of delivery or a receipt notification depending on whether the Issuer Notice was sent to the issuer’s physical or email address.

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. No primary issuance or initial offerings of securities are permitted on a TSV under the TSV Exemption.

A TSV must verify that the Tokenized NMS Stock made available for trading on the TSV provides holders the same rights and privileges as does traditional NMS stock of an equivalent class. A Tokenized NMS Stock would be deemed to provide the same rights and privileges as does traditional NMS stock if, among other things, it conveys the same interest in the company that holders of the underlying NMS stock have, a right to receive the same dividends that the company issues to holders of the underlying NMS stock, a right to exercise the same voting rights that holders of the underlying NMS stock may exercise, and a right to receive the same share of the residual assets of the company upon liquidation as holders of the underlying NMS stock receive. For example, regardless of the mechanism used to pass through any voting rights of the underlying NMS stock, a TSV can only make available for trading an NMS stock tokenized by a third party that is unaffiliated with the issuer of the underlying NMS stock 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 the shareholders.

Tokenized NMS Stock traded on a TSV under the TSV Exemption is subject to limitations on the number of symbols and volume traded. Tokenized NMS Stock is divided into two tiers: Tier 1 (“Tier 1 Tokenized NMS Stock”) and Tier 2 (“Tier 2 Tokenized NMS Stock”). Tier 1 and Tier 2 Tokenized NMS Stock comprise the NMS stocks in Tier 1 and Tier 2, respectively, of the National Market System Plan to Address Extraordinary Market Volatility (“Limit Up-Limit Down Plan” or “LULD Plan”).

Tier 1 Tokenized NMS Stock traded on a TSV under the TSV Exemption cannot exceed 75 symbols traded and 0.25 percent of the average daily share volume during the prior month in the relevant NMS stock as reported by an effective transaction reporting plan. Tier 2 Tokenized NMS Stock traded on a TSV under the TSV Exemption cannot exceed 250 symbols traded and 2.5 percent of the average daily share volume during the prior month in the relevant NMS stock as reported by an effective transaction reporting plan. The percentage of the average daily share volume during the prior month for a given security shall be calculated using the average daily share volume of a given Tokenized NMS Stock traded on the TSV as the numerator, and the average daily share volume of the NMS stock (as reported by an effective transaction reporting plan) as the denominator. When calculating volume for purposes of compliance with the TSV Exemption, a TSV must aggregate its trading volume with that of its affiliated TSVs for a given Tokenized NMS Stock. Similarly, when calculating the number of symbols traded for purposes of compliance with the TSV Exemption, the TSV must aggregate its number of symbols traded with the number of symbols traded by its affiliated TSVs. This is intended to help avoid a situation in which businesses are structured into multiple TSVs to avoid triggering the volume and symbol limitations.

The first time a TSV exceeds a volume threshold in a Tokenized NMS Stock, it will not be required to take any action, other than to ensure that it does not exceed the volume thresholds going forward.

After the first time a TSV exceeds the volume threshold in a given Tokenized NMS Stock, each time the TSV subsequently exceeds the volume threshold in the applicable Tokenized NMS Stock, the TSV must immediately pause trading in such Tokenized NMS Stock for three months. The TSV may resume trading in the same Tokenized NMS Stock three months from the date the TSV exceeded the volume threshold. During such pause, a TSV may continue to trade Tokenized NMS Stocks that have not exceeded the thresholds. Upon approaching a volume threshold but before triggering the threshold, a TSV may choose to pause trading in a Tokenized NMS Stock to avoid triggering the volume threshold.

A TSV must make U.S. dollar-denominated data concerning transactions freely and publicly available in a machine-readable format for all transactions within the past thirty (30) days. The transaction data must be updated within ten (10) minutes of the occurrence of any transaction and include, at minimum, the following: (i) the symbols for each Tokenized NMS Stock and paired asset (non-security crypto asset, tokenized money market fund, or Tokenized NMS Stock), (ii) the transaction price, (iii) the transaction size, (iv) the transaction time at the AMM Liquidity Pool, and (v) the transaction direction. In addition, the TSV must 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.

A TSV must make such transaction data publicly available to market participants at the same time and on the same terms.

A TSV must stop trading in a Tokenized NMS Stock concurrently with any stoppage of trading in the underlying NMS stock on the primary listing exchange, which includes a halt or a suspension. Stoppages in trading in a Tokenized NMS Stock occur for various reasons, such as, among others, a trading halt in the underlying NMS stock in the event a market-wide circuit breaker is triggered or pending dissemination of material news or a trading suspension of the underlying NMS stock by the SEC, the SRO, or associated with delisting proceedings.

Following any stoppage of trading in a Tokenized NMS Stock, a TSV must immediately notify its TSV Participants of the stoppage through any regular means of communication with its TSV Participants (e.g., website, software application, or interface).

To mitigate adverse effects of any such events, a TSV must immediately notify its TSV Participants, and promptly notify the Commission, of an event that has a significant impact on the operation of the TSV or on its participants (“significant operational event”).

A TSV must remedy any known significant operational events as soon as reasonably practicable and notify its TSV Participants of the remediation.

A TSV must make and keep current trading records as well as any information related to compliance with the conditions of the TSV Exemption, including: (a) Information regarding trading interest in Tokenized NMS Stock, including date and time of receipt, size, and price (denominated in U.S. dollars); (b) Information about transactions, including date and time of execution, size, non-security crypto assets or tokenized money market funds traded in pairs with a Tokenized NMS Stock, cancellations, modifications, and price (denominated in U.S. dollars); (c) Information regarding the methods used to verify or screen TSV Participants and verify the wallet addresses associated with each TSV Participant used to access the TSV; (d) Fees, rebates, and discounts, and any material sources of compensation to the TSV related to activities on the TSV; (e) For any stoppage of trading by the TSV, the Tokenized NMS Stock that stopped trading, reasons for the stoppage, the start time and end time of the stoppage, and the reasons for resuming trading; (f) The average daily share trading volume of each Tokenized NMS Stock traded on the TSV; (g) Events that impact the operation of the TSV or the TSV Participants, such as system intrusions and system disruptions; and (h) All notices submitted to the public, Commission, issuers, and TSV Participants in connection with the TSV Exemption (e.g., public Notice, Issuer Notice, notice of pausing trading in a Tokenized NMS Stock in connection with a volume threshold, notice of a stoppage of trading in a Tokenized NMS Stock, notice of a significant operational event).

A TSV must preserve all such books and records while the TSV Exemption is effective and for a period of three years after the end of the TSV Exemption, maintain such books and records in the United States, and make promptly available all books and records of the TSV to the Commission staff in both a human-readable format and a reasonably usable electronic format upon request. A TSV must consent to examinations of its books and records by the Commission staff at any time, including for ongoing compliance with the conditions of the TSV Exemption. Under the TSV Exemption, records from a distributed ledger would satisfy such books and records requirements if they can be readily accessed by the Commission in a human-readable format and a reasonably usable electronic format.

i. Tokenization: Describe the steps (e.g., audits, certifications, attestations) the TSV has taken to verify that the Tokenized NMS Stock provides holders the same rights and privileges as does traditional NMS stock of an equivalent class.

j. Notice of Issuer Objection: Identify any issuer of an NMS stock underlying a Tokenized NMS Stock that has provided a timely Notice of Issuer Objection to trading the Tokenized NMS Stock.

aa. Service Providers: Identify any entities, other than the TSV, that support the services or functionalities of the TSV and describe their roles and responsibilities with respect to the TSV. These include, among others, service providers that perform services related to permissioning subscribers, identifying and mitigating cyber risk, monitoring trading activity, displaying trading interest, recordkeeping, and clearance and settlement.

If a third-party service provider performs permissioning services, such as verification-related services, for example, at the direction of or on behalf of the TSV, the TSV, not such third-party service provider, would be responsible for ensuring that the TSV services comply with the conditions of the TSV Exemption.

TSV Provided AMM Liquidity Pool. For purposes of compliance with the Covered Firm Exemption, a Covered Firm’s securities activities must be limited to activities related to the trading of Tokenized NMS Stock in an AMM Liquidity Pool operating pursuant to the TSV Exemption.

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

4. Should the TSV Exemption be modified to permit a TSV to trade securities other than Tokenized NMS Stock? Which types of securities should TSVs be limited to trading under the TSV Exemption? Should the non-security crypto assets or tokenized money market funds that are permitted to trade in pairs with Tokenized NMS Stock on a TSV be limited to certain types of non-security crypto assets or tokenized money market funds?

The exemptions are effective from September 17, 2026, until September 17, 2031. The Commission may modify the length or any other aspect of the exemptions pursuant to its authority under section 36 of the Exchange Act if it determines that such modification is necessary or appropriate in the public interest and consistent with the protection of investors.