SEC Staff of the Division of Trading and Markets Issues FAQs on the Innovation Exemption

On October 20, 2026, the Staff of the Division of Trading and Markets (the “Division”) of the Securities and Exchange Commission (the “SEC”) published frequently asked questions (the “FAQs”) regarding the SEC’s September 17, 2026 order (the “Innovation Exemption Order”).  The Innovation Exemption Order grants temporary, conditional exemptive relief from the definition of “exchange” in Section 3(a)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”) for certain distributed ledger trading venues for tokenized NMS stocks (“TSVs”) and from the definition of “dealer” in Section 3(a)(5) of the Exchange Act for certain liquidity providers (“Covered Firms”).

The FAQs focus on the notice process for prospective TSVs and provide the following key guidance:

Timing of the Public Notice

A TSV must publish a Notice prominently on its publicly available website at least 30 calendar days before commencing operations.  The Notice must be in plain English, be clear, concise, and understandable, and be accurate and complete, addressing all the information identified in Section III of the Innovation Exemption Order as it will apply upon commencement of trading.  Accordingly, in the Staff’s view, a TSV should publish its Notice only after its operations and access standards are established and ready for production, and must amend the Notice thereafter to keep its disclosures current.

Pending Issuer Notice Objection Periods

Because a TSV cannot operate or trade Tokenized NMS Stocks before the end of the 30-calendar day public Notice period, a TSV may list in its public Notice the third-party Tokenized NMS Stocks for which it has provided Issuer Notice and indicate that the objection period is pending.  If the issuer does not deliver a timely Notice of Issuer Objection, the TSV may make the Tokenized NMS Stock available for trading and must amend its public Notice accordingly.  If the issuer does timely object, the TSV must amend its public Notice to reflect the objection and cannot make that Tokenized NMS Stock available for trading.

The FAQs highlighted the list of persons that have already provided written notice to the SEC that they intend to operate pursuant to the TSV Exemption, which will be continually updated.

They also provided a point of contact at the SEC for questions about the Innovation Exemption Order.

The FAQs are another step in a series of actions by the SEC providing regulatory clarity for the digital asset markets, and are a helpful signal that the Division is actively engaging with prospective TSVs and Covered Firms as they prepare to rely on the Innovation Exemption.

Access the FAQs: Division of Trading and Markets FAQs on the Innovation Exemption.

Access the referenced Order: Innovation Exemption Order.