SEC Proposes Rescinding Reg NMS Order Protection Rule

The Securities and Exchange Commission proposed amendments on 11 June that would rescind two core pieces of Regulation NMS: Rule 611, the order protection rule for national market system stocks, and Rule 610(e), which restricts locked and crossed quotations.

Rule 611 is the trade-through rule. It generally requires trading centers to protect better-priced displayed quotations at other venues. The SEC proposal would remove that requirement, rescind related definitions in Rule 600 and make conforming changes to connected provisions.

The agency said the public comment period will remain open for 60 days after the proposal is published in the Federal Register. That gives exchanges, brokers, wholesalers, market makers and institutional trading desks a formal window to argue how the change would affect routing, liquidity access and execution quality.

Why it matters

The proposal goes directly to U.S. equity market structure. If adopted, brokers and trading venues would have more room to design routing logic without the current trade-through framework, but traders would need to watch whether displayed top-of-book protection weakens, spreads change, or execution quality metrics become harder to compare across venues.

For active equity traders, the practical effect would depend on how brokers update routing policies and disclosures. The proposal is not a final rule, so no trading workflow changes immediately.

What to watch next

Watch for the Federal Register publication date, major exchange and broker-dealer comment letters, and any SEC discussion of how best execution oversight would operate if the current protected-quote framework is removed.