The US Securities and Exchange Commission (SEC) has proposed amendments to Regulation NMS, specifically the revocation of rules 611 and 610 (e).
The proposals, announced on 11 June 2026, would change key pillars of the market structure rules. The first seeks to remove the ‘trade-through rule’ which requires brokers and exchanges to route an order to the venue displaying the best quoted price, while the second proposes to remove the provision preventing ‘locked’ and ‘crossed’ markets.
In addition, the amendments would also rescind related defined terms in rule 600, as well as make conforming changes to any other provisions required.
“After two decades of Rule 611, it is high time that the Commission review its unintended consequences that have hindered – rather than enhanced – the long-term growth of our markets,” said Paul Atkins, chair of the SEC.
“This proposal is intended to simplify market structure and reduce costs for market participants while allowing competition, innovation, and other market forces to shape the continuing evolution of our equity markets.”
The SEC initially introduced Regulation NMS in 2005, with the aim of modernising US equity markets, and providing investors with protections to ensure they can find the best prices when buying and selling stocks.
Changes to rules 611 and 610 (e) will likely trigger shifts in execution quality and competition, impacting broker-dealers, retail investors and exchanges.
However, the impact these potential changes may actually have on the industry is up for debate. Speaking to The TRADE, Larry Tabb, head of market structure research at Bloomberg Intelligence, said: “Just because 611 goes away, brokers are not going to change their routing strategies especially given that they are still beholden to best execution rules. This means more for crypto and tokenised equity exchanges, who will now be able to be folded into the SEC equity exchange fabric. And without routing, it becomes easier for a tokenised equity exchange to function with real time settlement.
“RT settlement is challenging for tokenised equity exchanges because if they route to another exchange, they need to pre-borrow, if they are going short, or have cash at the exchange to pay for the securities they buy. It becomes a significant challenge. Its easier if all of the trading happens on the exchange, even if the pricing isn’t as good as what is being offered elsewhere, which is the crux of 611.”
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Elsewhere, the SEC has said that the proposed amendments are expected to align with the modern trading landscape, better complimenting fragmentation and execution structures across US equity markets.
In its submission, the SEC explained: “Since the adoption of these rules, the structure of the US equity markets has evolved dramatically, and today’s markets are highly automated, interconnected, fast, and competitive.
“While a goal of rule 611 was to incentivise displayed liquidity, since its adoption the percentage of orders interacting with non-displayed liquidity on- and off-exchange has consistently increased. In addition, since the adoption of rules 611 and 610(e), US equity markets have become increasingly fragmented and complex.”
Following the publication of the proposed amendments, a public comment period will run for 60 days, to allow for industry feedback on the suggestions.