SEC Tokenized Stock Exemption Puts Webull PFOF and Broadridge Proxy Fees at Risk

On 17 September 2026 the US Securities and Exchange Commission issued a five-year "innovation exemption" that lets tokenized US-listed stock trade in automated market-maker pools on public blockchains. The SEC tokenized stock exemption does not mainly hit exchange quoting. It hits two fee pools built on stock sitting in street name: the per-position proxy billing rail and retail order-flow rebates.[1]

Order 34-106402 lets a qualifying Tokenized Securities Venue (TSV) operate without registering as an exchange.[2] The conditions include that token holders receive the same rights and privileges as ordinary stockholders, that issuers may object to third-party tokenization of their own shares, and that the number of symbols and the volume traded are capped.[1][3] The Commission described the order as interim relief pending durable rulemaking.[4]

How street name and PFOF actually work

When a US retail investor buys a share, it is usually not registered in that investor's name. It is registered to the broker, and the investor is the beneficial owner — the arrangement known as street name. SEC rules require public companies to reimburse those nominees for distributing stockholder communications, billed per beneficial-owner position. That is a per-account business.[5]

The other broker business is selling retail orders to wholesale market makers, who pay a rebate back. That is payment for order flow, or PFOF.[6] An automated market-maker pool works differently: liquidity comes from a smart-contract pool, prices come from a formula, and the pool buys order flow from no one.

Two conditions drive everything downstream. The SEC's own fact sheet names "enabling investor self-custody" as the first benefit of the arrangement. And the dealer exemption is available only where "a liquidity provider's securities activities must be limited to activities related to the trading of tokenized NMS stock in an AMM Liquidity Pool" — which the broader registered wholesalers do not satisfy.[2]

From a self-custody wallet back onto the issuer's register

The chain starts with the form of ownership: a self-custodied tokenized share is a registered holding, not one beneficial-owner position held under a broker's name.

The first revenue line exposed is billed per account. Every share that leaves street name removes one position from the proxy billing base. That line is Broadridge's Regulatory recurring revenue of $1,434.9m in fiscal 2026, 19.2% of total revenue.[5]

The second is the rebate. An AMM pool pays nothing for order flow — the liquidity provider earns the spread inside the pool — so every retail share routed to a TSV removes one wholesaler rebate.

Cboe fell 8.63% over the six sessions from 9 to 17 September; Coinbase rose 5.75% on the day and Securitize rose 14.93%.[7] Because the first year carries symbol and volume caps, neither revenue line should show much change before the second half of 2027.[1]

Companies that may be affected

Webull (BULL) — an online brokerage serving US retail investors, sitting on the rebate leg. Fiscal 2025 equity order-flow rebates were $94.2m, 16.5% of $571.0m of revenue, against operating income of only $58.5m that year; the line is 1.6x operating income.[6] If retail orders move to AMM pools, the pressure would land on that near-full-margin revenue line. Webull runs no chain of its own and sells no stock token. Webull closed up 0.26% on 17 September.[7]

Broadridge (BR) — the back-office provider handling stockholder communications and proxy voting for issuers and brokers, sitting on the per-account leg. Fiscal 2026 Regulatory recurring revenue was $1,434.9m, with 16% equity record growth and 12% billable position growth that year.[5][8] If holdings leave street name for self-custody, the pressure would land on that per-account recurring revenue, with the pace of attrition still the open variable. The company's fiscal 2026 annual report says it is extending its proxy voting and disclosure capabilities "to support all models of tokenized securities ownership."[5] Broadridge closed down 1.66% on 17 September.[7]

How to verify this

First, count whether any venue actually opens. The order requires an operator to publish notice on its website at least 30 days before operating; zero notices by the end of 2026 means the chain has not started.[1]

On the Broadridge side, fiscal 2027 first- and second-quarter position growth is the first checkpoint, but the real test is the March-to-June 2027 proxy season, reported that August. On the Webull side, equity rebates against equity trading notional in the fourth quarter of 2026 become visible sooner.

Several outcomes would break the chain: caps tight enough that no venue can build a business; issuers exercising the objection right en masse; registered wholesalers obtaining the same exemption through separately capitalised entities. One direct falsification would be Broadridge's Regulatory revenue continuing to compound near its fiscal 2026 rate of about 12% while tokenized volume rises.

Sources

[1] SEC press release 2026-90 · 2026-09-17 · regulatory · https://www.sec.gov/newsroom/press-releases/2026-90-sec-issues-innovation-exemption-facilitate-trading-tokenized-nms-stock-request-comment [2] SEC fact sheet, order 34-106402 · 2026-09-17 · regulatory · https://www.sec.gov/files/34-106402-fact-sheet.pdf [3] CNBC · 2026-09-17 · news · https://www.cnbc.com/2026/09/17/sec-clears-path-for-tokenized-stocks-bringing-24/7-trading-closer.html [4] Statements on the Innovation Exemption by Chairman Atkins and Commissioner Uyeda · 2026-09-17 · regulatory · https://www.sec.gov/newsroom/speeches-statements/atkins-innovation-exemption-bridge-toward-durable-rulemaking-091726 [5] Broadridge Financial Solutions fiscal 2026 10-K (year ended 30 June 2026) · 2026-08-04 · company filing · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=BR&type=10-K [6] Webull Corporation FY2025 20-F · 2026-04-09 · company filing · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&company=webull&type=20-F [7] Drillr price_volume_history · 2026-09-09 to 2026-09-17 [8] Broadridge fiscal 2026 fourth-quarter and full-year earnings call · 2026-08-04