SEC seeks to scrap best-price rule

The Securities and Exchange Commission has proposed repealing a long-standing market protection rule that requires brokers and trading venues to avoid executing orders at a worse price than the best displayed quote across U.S. stock exchanges.

The proposal would eliminate Regulation NMS Rule 611, better known as the trade-through rule or order protection rule. The SEC says the rule made sense when it was adopted in 2005, but no longer fits a market that is now highly automated and interconnected.

The commission opened a 60-day public comment period on the proposal. If adopted, the change would remove one of the core price-protection requirements in U.S. equity trading and could reshape how brokers route orders through fragmented markets.

What the rule does

Rule 611 was adopted in 2005 as part of Regulation NMS, a set of rules meant to modernize U.S. stock-market structure. The trade-through rule was designed to protect investors from getting an inferior price when a better quote was available elsewhere.

In practice, the rule requires trading venues to avoid executing at a price worse than the best visible price across U.S. stock markets. It was built for a market that was less automated and less interconnected than the one that exists today.

Supporters of the rule say it remains a useful guardrail for best execution, especially for retail investors, because it ties trades to the best advertised price available at the time of execution.

Critics have argued for years that the requirement adds complexity in a market now dominated by automated routing and multiple competing venues. They also say it contributes to higher data and connectivity costs.

Why the SEC wants repeal

The SEC argues that the original rationale for Rule 611 has been overtaken by modern market structure. In the agency's view, U.S. equity markets are now fast enough and interconnected enough that the 2005 safeguard is no longer necessary in its current form.

The commission says repeal would reduce compliance burdens and market-data costs for brokers. It estimates annual savings for the brokerage industry of about $54.2 million to $77 million.

The SEC also estimates about $48.2 million in one-time implementation costs as firms update systems, routing logic and procedures to match the new rule structure.

The proposal is backed by SEC Chair Paul Atkins, who has long criticized the trade-through rule. Two other commissioners also supported the move, according to the reporting.

Why the rule matters

The trade-through rule sits at the center of several competing policy goals. On one side is investor protection, especially the idea that customers should not receive a worse displayed price when a better one was available.

On the other side are concerns about market fragmentation, execution complexity and the cost of maintaining the infrastructure needed to comply with price-protection rules across many venues.

That tension has grown as U.S. equity trading has become more automated and more dependent on market data, speed and routing technology. The SEC's proposal is a direct challenge to one of the signature rules built for that earlier market design.

Background to the debate

The rule was adopted in 2005, when market structure was very different. Fragmentation was a policy concern then, but the market was not yet as linked, fast or algorithmically driven as it is now.

Barron's previously reported on Wall Street's debate over the rule and described the trade-off between price protection and the costs created by fragmentation, fees and data access. That context now frames the SEC's formal proposal to unwind the rule entirely.

The Wall Street Journal reported the proposal on June 11, 2026, and said the SEC is arguing that the regulatory burden is no longer justified by the current trading environment. The commission's public filing starts the formal comment process.

What happens next

The SEC will collect public comments for 60 days before deciding whether to revise, finalize or withdraw the proposal. Market participants, exchanges and broker-dealers are likely to respond on execution quality, fees, fragmentation and the possibility of narrower alternatives.

Investor advocates are likely to focus on whether repeal could weaken a long-standing best-execution protection. Brokers and trading venues are more likely to emphasize lower operating costs and reduced compliance complexity.

The commission could also face pressure to keep some narrower protections or carve-outs if it decides the current rule is too rigid but still wants to preserve safeguards for investors.

For now, the proposal marks a major policy shift at the SEC: an effort to unwind a core part of Regulation NMS on the argument that modern markets have made the rule obsolete.