On June 11, 2026, the SEC voted to propose rescinding Rule 611 and Rule 610(e) of Regulation NMS (Exchange Act Release No. 34-105655, File Number S7-2026-20). The proposing release was published in the Federal Register on June 17, 2026 (Vol. 91, No. 116). Comments are due 60 days following Federal Register publication.
Rule 611, known as the Order Protection Rule or trade-through rule, has been the structural centrepiece of US equity market regulation since Regulation NMS was adopted in 2005. It requires trading centres to establish policies and procedures reasonably designed to prevent trade-throughs: executions at prices inferior to protected quotations displayed by other trading centres. Rule 610(e) requires exchanges and national securities associations to maintain rules requiring their members to reasonably avoid displaying quotations that lock or cross protected quotations.
Both rules would be eliminated entirely under the proposal. Related defined terms in Rule 600, including "trade-through," "protected bid or protected offer," "protected quotation," "manual quotation," "automated quotation," "automated trading centre," and "intermarket sweep order," would also be removed. Conforming amendments would be made to Rule 610(c), Rule 605-related definitions, Rule 15c3-5 (the Market Access Rule), Rule 15b9-1, and other provisions.
This is one of the most significant potential changes to US equity market structure in two decades. It affects exchanges, broker-dealers, institutional investors, retail investors, and every participant in the order routing and execution chain.
What Is Regulation NMS Rule 611 and What Has It Required Since 2005?
Rule 611 was adopted as the centrepiece of Regulation NMS in 2005 to address a specific problem: fragmented US equity markets where trading centres did not reliably route orders to the venue displaying the best price. A trade-through occurred when a trading centre executed an order at a price inferior to a protected quotation displayed at another trading centre. Rule 611 required trading centres to establish policies and procedures to prevent this from happening.
A protected quotation under the current rule is an automated, accessible, and immediately executable bid or offer displayed by a trading centre at the national best bid and offer (NBBO). Only round-lot quotations qualify as protected quotations. In 2024, the Commission amended the definition of "round lot" to implement a tiered approach based on a stock's average closing price on its primary listing exchange. That change went into effect in November 2025.
The practical compliance burden Rule 611 created is substantial. Every trading centre must connect to, pay for market data from, and monitor every exchange with a protected quotation, even exchanges with minimal market share. Routing logic must be designed around intermarket sweep orders (ISOs), which are the mechanism that allows trading centres to satisfy Rule 611 while still achieving execution across multiple venues. Surveillance systems must be maintained to detect and document trade-through exceptions. When the rule was adopted in 2005, there were approximately eight exchanges trading NMS stocks. As of June 2026, there are 17 operating exchanges, with three more approved.
The proliferation of exchanges has compounded Rule 611's compliance cost. Because any exchange that displays a protected quotation effectively forces broker-dealers to connect and pay data fees, Rule 611 created a structural subsidy for exchange proliferation. New exchanges could attract connectivity revenue and order flow simply by displaying a protected quote, even without meaningful market share. This dynamic, the SEC argues in the proposing release, has driven up costs and fragmented liquidity across an increasing number of venues without commensurate benefit to investors.
Chairman Atkins has been consistent on this point. He originally dissented from the adoption of Regulation NMS in June 2005. In his statement on the June 11, 2026 proposal, he characterised Rule 611's unintended consequences as having hindered rather than enhanced the long-term growth of US markets and described the proposal as intended to simplify market structure and reduce costs while allowing competition, innovation, and other market forces to shape the continuing evolution of equity markets.
What Did the SEC's 2025 and 2026 Roundtables Reveal About Rule 611?
The proposal did not emerge without preparation. The SEC held two roundtables on Rule 611 and the trade-through prohibition before bringing the formal proposal to a vote.
The first roundtable, on Trade-Through Prohibitions, was held on September 18, 2025. The second roundtable, specifically on Rule 611, was held on December 16, 2025. Comments submitted in connection with both roundtables are publicly available on the SEC's website.
The range of views expressed at the roundtables reflects the genuine complexity of the issue. Commenters critical of Rule 611, including institutional asset managers, principal trading firms, and market structure academics, generally argued that the rule has not succeeded in its stated objective of enhancing the reward for displaying limit orders and has produced negative unintended consequences. Specific criticisms included that Rule 611 increases information leakage for institutional traders by forcing interaction with small protected quotations across multiple venues, and that it has subsidised exchange proliferation and fragmentation at the expense of liquidity concentration.
Commenters supportive of maintaining some form of trade-through protection, including some retail investor advocates, argued that Rule 611 provides an important baseline of price protection for retail orders and that rescission would require strong compensating investor protections in the form of robust best execution rules and execution quality disclosure.
Commissioner Peirce, whose statement on the proposal characterised it as "the start of a journey into terrain that is less familiar," noted that a recent comment letter predicted a post-Rule 611 marketplace characterised by even more exchanges and alternative trading systems, a proliferation of order types, and new market complexity. She asked the Division of Economic and Risk Analysis what metrics it would use to measure the effects of rescission if the proposal is adopted, which reflects the genuine uncertainty about how market structure would evolve in Rule 611's absence.
The proposing release itself acknowledges this uncertainty. It requests extensive public comment on a broad range of questions, including how best execution standards would evolve, whether exchanges would maintain voluntary restrictions on locked and crossed markets, what would happen to routing logic and execution quality measurement, and what the impact on exchange competition and venue fragmentation would be.
What Specific Rules and Definitions Would Be Removed Under the Proposal?
The rescission is broader than just Rule 611. Understanding the full scope of what would be eliminated matters for compliance teams assessing the operational implications.
Rule 611 itself. The trade-through prohibition in its entirety. Trading centres would no longer be required to establish, maintain, and enforce policies and procedures reasonably designed to prevent executions at prices inferior to protected quotations.
Rule 610(e). The locked and crossed markets prohibition. Currently, exchanges and national securities associations must maintain rules requiring their members to reasonably avoid displaying quotations that lock or cross protected quotations. A locked market occurs when the best bid equals the best offer. A crossed market occurs when the best bid exceeds the best offer. Rule 610(e) would be rescinded along with Rule 611.
Related defined terms in Rule 600. The following defined terms would be removed because they derive their meaning from the Rule 611 framework: "trade-through," "protected bid or protected offer," "protected quotation," "manual quotation," "automated quotation," "automated trading centre," and "intermarket sweep order."
Conforming amendments to other rules. Rule 610(c) (access fee caps as they relate to protected quotations), Rule 605-related definitions, Rule 15c3-5 (the Market Access Rule), and Rule 15b9-1 would all require conforming amendments because they currently reference Rule 611 or protected quotations. The proposing release notes that SRO rulebooks would also need to redefine or eliminate terms that currently reference Rule 611.
NMS Plan implications. Certain NMS Plans reference Regulation NMS requirements or defined terms that would be rescinded. The consolidated equity market data plans, including the CT Plan, the Nasdaq UTP Plan, and the CTA/CQ Plan, currently determine quote credits based on certain automated quotations that do not lock or cross a previously displayed automated quotation. Plan participants may choose to amend such plans if the rescission is finalised.
What Rationale Does the SEC Give for Rescinding Rule 611?
The proposing release advances five specific rationales. Each is worth understanding because they signal what the SEC expects the rescission to accomplish and what arguments the Commission found persuasive across the roundtable process.
Exchange proliferation has changed the economics Rule 611 assumed. In 2005, the rule was designed to connect fragmented markets. With 17 operating exchanges and three more approved, the rule now effectively requires broker-dealers to connect to every venue displaying a protected quote, subsidising exchange proliferation and driving up infrastructure costs without commensurate benefit to investors.
Compliance costs are disproportionate to the benefit. The requirement to build and maintain routing logic, ISO infrastructure, trade-through exception management systems, and surveillance programmes around protected quotations imposes costs across the entire market structure. The SEC cites market participant commentary that these costs are substantial and that the rule has not demonstrably improved execution quality in proportion to the compliance burden.
Market structure has fundamentally changed since 2005. Trading is now electronic. Routing is automated. Market data is more widely and rapidly available. Exchanges, ATSs, single-dealer platforms, wholesalers, and other execution venues are interconnected through sophisticated technology. The Commission's theory is that a rule designed to address slow, fragmented, and insufficiently connected markets may now be contributing to the complexity it once sought to solve.
Non-displayed trading volume has grown substantially. A significant proportion of US equity trading now occurs off-exchange or in non-displayed (dark) venues, which are not subject to Rule 611's protections regardless. Extending the trade-through prohibition only to displayed, protected quotations while large volumes trade in venues outside the rule's scope limits the rule's effectiveness.
Competition and innovation may produce better outcomes without the rule. The SEC's theory is that removing Rule 611 would allow exchanges and ATSs to experiment with trading protocols, auction models, priority rules, and execution designs that the current rule constrains. Whether this theory is correct is the central empirical question the proposing release acknowledges it cannot answer in advance.
What Happens to Best Execution Obligations If Rule 611 Is Rescinded?
This is the most significant practical question for broker-dealers and the one the proposing release is most careful to address.
Rule 611's rescission does not eliminate broker-dealers' best execution obligations. Best execution under FINRA Rule 5310 and analogous obligations requires broker-dealers to use reasonable diligence to ascertain the best market for a security and to execute orders in that market so that the resultant price is as favourable as possible for the customer. These obligations exist independently of Rule 611 and would remain fully in force if the rule is rescinded.
What changes is the framework within which best execution is assessed. Under the current framework, compliance with Rule 611's trade-through prohibition provides broker-dealers with a significant structural anchor for their best execution analysis: if an execution was at a price not inferior to the NBBO (which Rule 611 helps define through protected quotations), that execution is presumptively consistent with best execution obligations.
If Rule 611 is rescinded, the NBBO remains a relevant benchmark, but the mandatory intermarket price protection that Rule 611 provides disappears. Broker-dealers would need to demonstrate best execution on a facts-and-circumstances basis, considering price, speed, likelihood of execution, and other factors, without the structural backstop of the trade-through prohibition.
The proposing release requests extensive comment on how best execution standards, guidance, and SRO rules should evolve if Rule 611 is rescinded. The SEC has not proposed specific new best execution standards alongside the rescission proposal. This is a deliberate sequencing choice: the Commission wants to assess public comment on the rescission itself before proposing any companion best execution changes.
For retail investors, the key question is whether rescission would affect execution quality, price improvement, and confidence in market fairness. The SEC's implicit view is that broker-dealers' best execution duties, execution quality data requirements under Rule 605, competitive wholesaler practices, and modern routing technology may mitigate concerns about execution quality in the absence of Rule 611. Market participants and commenters who disagree with this view should engage in the comment process.
What Else Did the SEC Do on June 11, 2026 Related to Regulation NMS?
The Rule 611 rescission proposal was not the only market structure action the SEC took on June 11, 2026. Two related actions provide important context.
Extension of the 2024 Regulation NMS amendments compliance date. The 2024 Regulation NMS amendments, which addressed minimum pricing increments under Rule 612 and reduced access fee caps under Rule 610(c), had a compliance date of November 2026. On June 11, 2026, the SEC granted temporary exemptive relief extending that compliance date by one year to November 2027. The SEC cited concerns about the cumulative impact of multiple market structure initiatives scheduled for implementation during 2026, including Rule 605 implementation requirements, expanded trading hours initiatives, and other significant technology and infrastructure changes affecting exchanges, broker-dealers, clearing firms, and vendors.
This delay is directly relevant to the Rule 611 rescission proposal because the 2024 amendments and the rescission proposal interact. The tiered round-lot definition that took effect in November 2025 as part of the 2024 amendments has already altered the practical scope of Rule 611's protections, particularly for high-priced stocks where odd-lot quotes now represent substantial notional liquidity and, in many cases, set the effective best available price inside the NBBO.
CT Plan Amendment No. 3. On June 2, 2026, the members of the Consolidated Tape Plan LLC filed Amendment No. 3 to the CT Plan. The CT Plan and other NMS Plans reference Rule 611 and protected quotations in ways that would require amendment if the rescission is finalised.
These concurrent actions reflect the Commission's view that market structure reform in 2026 requires careful coordination across multiple overlapping regulatory changes, not sequential implementation of individually complete reforms.
Frequently Asked Questions
What is Regulation NMS Rule 611 and why is it called the trade-through rule?
Rule 611, adopted as part of Regulation NMS in 2005, requires trading centres to establish policies and procedures reasonably designed to prevent trade-throughs: executions at prices inferior to protected quotations displayed by other trading centres. It is called the trade-through rule because it prohibits trading through a better-priced protected quote at another venue. It is also called the Order Protection Rule because it protects the priority of the best-priced protected quotation.
What is the SEC proposing and what is the comment deadline?
On June 11, 2026, the SEC voted to propose rescinding Rule 611 and Rule 610(e) of Regulation NMS entirely (Exchange Act Release No. 34-105655, File Number S7-2026-20). The proposing release was published in the Federal Register on June 17, 2026. Comments are due 60 days after Federal Register publication. They can be submitted electronically through the SEC's internet comment form or by email to rule-comments@sec.gov, referencing File Number S7-2026-20.
What is Rule 610(e) and why is it being rescinded alongside Rule 611?
Rule 610(e) requires exchanges and national securities associations to maintain rules requiring their members to reasonably avoid displaying quotations that lock or cross protected quotations. A locked market occurs when the best bid equals the best offer. A crossed market occurs when the best bid exceeds the best offer. Rule 610(e) is being rescinded alongside Rule 611 because it derives its meaning from the protected quotation framework that Rule 611 creates. Without Rule 611's definition of protected quotations, Rule 610(e)'s prohibition loses its operational basis.
What happens to best execution obligations if Rule 611 is rescinded?
Best execution obligations under FINRA Rule 5310 and analogous SEC requirements remain fully in force. The mandatory intermarket price protection that Rule 611 provides disappears, but broker-dealers must still use reasonable diligence to execute customer orders at the most favourable prices available. The practical shift is from a prescriptive intermarket price protection rule toward a more principles-based, facts-and-circumstances execution quality framework. The SEC has not yet proposed specific new best execution standards to accompany the rescission.
What defined terms in Regulation NMS would be removed?
The proposal would remove the defined terms "trade-through," "protected bid or protected offer," "protected quotation," "manual quotation," "automated quotation," "automated trading centre," and "intermarket sweep order" from Rule 600, along with conforming amendments to Rule 610(c), Rule 605-related definitions, Rule 15c3-5, and Rule 15b9-1. SRO rulebooks and NMS Plans that reference these terms would also require revision.
Is the rescission of Rule 611 a final rule?
No. The June 11, 2026 release is a proposed rule. It initiates a public comment process. A final rule, if adopted, would follow a subsequent rulemaking process based on the comments received. The proposal represents the beginning of a deliberative process, not a completed regulatory change.
Key Takeaways
- On June 11, 2026, the SEC proposed rescinding Rule 611 (the trade-through rule) and Rule 610(e) (the locked and crossed markets prohibition) of Regulation NMS in their entirety (Exchange Act Release No. 34-105655, File Number S7-2026-20). Comments are due 60 days after the June 17, 2026 Federal Register publication.
- Rule 611 has required trading centres since 2005 to maintain policies and procedures preventing trade-throughs: executions at prices inferior to protected quotations at other trading centres. The SEC's proposal is the most significant potential change to US equity market structure in two decades.
- The SEC's rationale rests on five premises: exchange proliferation has created compliance costs Rule 611's original design did not anticipate; market structure has fundamentally changed since 2005; compliance costs are disproportionate to the benefit; non-displayed trading volume limits the rule's scope; and competition may produce better outcomes without the rule.
- Rescission would remove Rule 611, Rule 610(e), and related defined terms including "protected quotation," "intermarket sweep order," and "trade-through" from Regulation NMS. Conforming amendments to Rule 15c3-5, Rule 15b9-1, and other provisions would follow.
- Best execution obligations under FINRA Rule 5310 and SEC requirements remain fully in force. The structural anchor Rule 611 provides for best execution analysis would disappear, requiring broker-dealers to demonstrate execution quality on a facts-and-circumstances basis. The SEC has not yet proposed companion best execution standards.
- On the same day, the SEC extended the compliance date for the 2024 Regulation NMS minimum pricing increment and access fee cap amendments from November 2026 to November 2027, citing cumulative implementation burden across multiple concurrent market structure initiatives.
- The proposal is not a final rule. It is a proposal. Market participants, broker-dealers, exchanges, institutional investors, and retail investor advocates should review the proposing release and engage in the comment process.
