On June 11th, the SEC proposed amendments to rescind Rules 611 (the Order Protection Rule) and 610(e) (the Access Rule’s locked/crossed market provision) of Regulation NMS under the Securities Exchange Act of 1934. The rule proposal is designed to streamline market structure, mitigate costs for market participants, and support competition and innovation, thus impacting the development of equity markets.
Rules 611 and 610(e) were introduced in 2005 to protect investors. The SEC reassessed the rules in 2018 as part of its comprehensive market structure review and determined that the rules impede overall sustained healthy market growth.
More specifically, staff found that the rules hold back competition and market development by:
- increasing market fragmentation
- increasing market structure complexity
- contributing to higher operational and compliance costs
- limiting order handling and execution flexibility and choice
- hindering the ability of competition to support market enhancement
Should the SEC’s proposed amendments be approved, they would:
- rescind Rule 611 of Regulation NMS, which contains the trade-through prohibition for national market system stocks
- rescind Rule 610(e) of Regulation NMS, which contains restrictions on locking and crossing quotations in national market system stocks
- rescind related defined terms in Rule 600 of Regulation NMS
- revise related provisions as needed
For more information on the The Trade-Through Rule and Locked and Crossed Markets Provisions of Regulation NMS rule proposal, please visit the SEC’s site.
Interested parties may submit comments on the rule proposal or before 60 days following its publication in the Federal Register.
Sources:
SEC Establishes Joint Data Standards as Required Under the Financial Data Transparency Act of 2022 (sec.gov)
Proposed Rule (sec.gov)
