SEC Proposes to Rescind Rule 611, the Order Protection Rule

The U.S. Securities and Exchange Commission voted on June 11 to propose rescinding the two rules at the heart of Regulation NMS, the trade-through prohibition in Rule 611 and the lock-and-cross ban in Rule 610(e). The proposal is the first formal step toward unwinding the 20-year-old framework, and it opens a 60-day public comment period once the release publishes in the Federal Register.

SEC Chairman Paul S. Atkins, who voted against the original 2005 adoption, said two decades of experience show the rules’ effects were the opposite of what was intended. The Commission framed the move as a simplification of equity market structure, while Commissioner Mark T. Uyeda called it “an important beginning in the broader, more complex journey” of reform. The trade group for the largest U.S. broker-dealers welcomed the due diligence and warned that rescinding one rule will force a rewrite of the rest.

The Two Rules the SEC Wants to Rescind

The SEC’s June 11 proposing release, posted on the agency’s website, would eliminate Rule 611 and Rule 610(e) and strip the related defined terms from Rule 600. The agency will also make conforming changes to other provisions that reference the two rules.

The vote marks the first formal rulemaking step toward unwinding the Regulation NMS framework adopted in 2005. The Commission has not specified a target date for adoption, but TD Cowen analyst Jaret Seiberg wrote in a note to clients Thursday that the agency is expected to finalize the rule in the first quarter of 2027.

SIFMA, the broker-dealer trade group, said in a statement Thursday that it looks forward to submitting comments. Comments are filed electronically through the SEC’s online form or by email to rule-comments@sec.gov, with the subject line including the rulemaking’s file number.

How Rule 611 and Rule 610(e) Shape a Trade

Rule 611, the Order Protection Rule, requires trading centers to put policies in place that prevent trade-throughs, or executing a trade at a price inferior to a protected quote displayed on another venue. Protected quotes are marketable limit orders that are automated, publicly displayed at the National Best Bid or Offer, immediately executable, and disseminated through the consolidated market data feeds. Intermarket Sweep Orders, or ISOs, are exempt.

Rule 610(e) is narrower. It prohibits trading centers from displaying quotations that lock or cross a protected quote in an NMS stock. The two rules have shaped equity trading behavior for two decades by making the displayed best price the de facto floor for execution across exchanges, alternative trading systems, and wholesaler books.

The Atkins Dissent, Twenty Years in the Making

Atkins cast one of two votes against Regulation NMS when the Commission adopted it on April 6, 2005, by a 3-2 margin. He and Commissioner Cynthia A. Glassman wrote in the 2005 dissent Atkins and Glassman filed against Reg NMS that the new trade-through rule, by protecting only top-of-book quotations, would entrench a particular model of market structure and foreclose alternatives. The dissent is the document Atkins has cited in speeches since returning to the agency as chair.

On July 21, 2025, Atkins called Reg NMS and Rule 611 bad for both investors and broker-dealers, blaming market distortion and resulting gamesmanship for the rule’s failure. The Commission hosted a public roundtable on September 18, 2025, to hear from market participants, the same event SIFMA referenced in its blog as the trade-through roundtable.

I look forward to reviewing public comments as we take a careful, deliberative approach to avoid repeating the same mistakes that brought us here.

Atkins, in the proposing release, described two decades of unintended consequences from the rule. Commissioner Mark T. Uyeda, in his accompanying statement, said the rescission is not an endpoint but the start of a journey into terrain that is less familiar, with open questions about best execution, transparency, trading mechanics, and investor confidence. Atkins has said in past speeches that the 2005 dissent laid out the case against Rule 611, and the June 11 release tracks that argument. The press release and a same-day X post both end on the same line about avoiding past mistakes.

The June 11 X post, posted the same evening, used a shorter version of the same closing line from the press release. The vote, the release, and the post together put the rescission at the top of Atkins’s market-structure agenda.

Industry Welcomes the Move, and Warns About the Octopus

SIFMA’s response, from president and CEO Kenneth E. Bentsen Jr., opened with appreciation for the SEC’s due diligence and quoted Atkins’s market-simplification language directly, in the trade association’s full response to the proposal. The trade group framed its support as conditional, however, and tied the rescission to a broader package of market-structure changes that are now under consideration. Those include the extension of trading into overnight hours and the incorporation of tokenized securities.

Before making any changes, it is important to identify and analyze interconnected market structure elements and study what corresponding impacts could stem from any intentional change, as well as the cumulative net effect of changes.

Bentsen, SIFMA’s president and CEO, has long argued that market structure is interconnected and that pulling on one strand pulls others. In a blog post following the 2025 roundtable, the trade group called Rule 611 the head of the octopus and listed the other rules any rescission would force a review of. Brokers already face connectivity costs to the 16 exchanges trading NMS stocks and to dozens of alternative trading systems, costs SIFMA says the rule has amplified.

• NBBO calculation
• Rule 610 access fees
• Rule 603 market data
• Rule 612 minimum pricing increments (tick sizes)
• Rule 605 order execution disclosure
• Regulation SHO short-sale rules

Why Tokenized Equities Have the Most to Gain

The most concrete beneficiaries of the rescission sit outside the traditional equity markets. Alex Thorn, head of firmwide research at Galaxy Digital, said the move would do more than any recent step to open tokenized U.S. stocks to decentralized finance trading. The reason is a deep technical mismatch: an automated market maker executes against a bonding curve at block-time granularity and cannot by construction route an Intermarket Sweep Order or ingest SIP data with the latency guarantees Rule 611 requires.

Without Rule 611, Thorn wrote, the SEC would fall back on FINRA Rule 5310’s principles-based best-execution duty at the broker level, a framework that can accommodate onchain venues. The shift clears what Atkins’s team calls the hardest market-structure obstacle to tokenization and lines up with the broader rewrite Uyeda flagged. Other hurdles, including exchange and ATS registration, clearance and settlement, and the design of the innovation exemption Atkins has previewed, remain on the to-do list.

The 60-Day Window Before a Broader Rewrite

The comment period is the first of several procedural gates. Once the proposing release publishes in the Federal Register, broker-dealers, trading venues, institutional and retail investors, academics, and the public have 60 days to submit comments on whether Rule 611 and Rule 610(e) should go. Comments become part of the public record, are posted on the SEC’s website without redaction, and feed the economic analysis the agency must complete before adoption.

The Commission has signaled that the rescission is one of several market-structure changes it expects to make. The four-item proposing release covers the trade-through rule, the locked-and-crossed rule, the related definitions, and conforming changes elsewhere. Public comments may also flag adjacent rules that need attention, and the Commission has invited input on best execution, transparency, and trading mechanics, the same open questions Uyeda’s statement said would shape what comes next.

The TD Cowen note to clients expects finalization in the first quarter of 2027, with the SEC likely to grant exemptive relief for tokenization pilots before then. Atkins’s June 11 X post, posted the same evening, used a shorter version of the same closing line from the press release. The comment window opens only after the Federal Register publishes the proposing release, which had not happened as of the SEC’s Thursday vote.

1. September 18, 2025: SEC holds the trade-through rule roundtable
2. June 11, 2026: Commission votes to propose rescinding Rules 611 and 610(e)
3. Federal Register publication plus 60 days: public comment period
4. Q1 2027 (TD Cowen estimate): expected final adoption

Frequently Asked Questions

What are Regulation NMS Rules 611 and 610(e)?

Rule 611 is the Order Protection Rule. It bars trading centers from executing customer orders at prices worse than the best displayed bid or offer on another automated exchange. Rule 610(e) is narrower. It bars trading centers from displaying quotes that lock or cross a protected quote in an NMS stock. Both sit inside the 2005 Regulation NMS framework that the SEC is now proposing to unwind.

Why is the SEC proposing to rescind them now?

Atkins, who dissented from the original adoption, has argued for years that the rules have produced market distortion and resulting gamesmanship rather than better prices for investors. The 2025 roundtable and the June 11 release frame the move as a simplification that allows competition and innovation to shape equity markets, and the Commission has invited comments on what should replace the framework.

How do I file a public comment on the proposal?

Comments are filed electronically through the SEC’s online form or by email to rule-comments@sec.gov. The subject line should include the rulemaking’s file number, which the Commission will assign when the proposing release publishes in the Federal Register. Paper comments go to the Secretary at 100 F Street NE, Washington, D.C. 20549-1090.

What would change for investors if Rule 611 goes away?

The Order Protection Rule today functions as a backstop to a broker-dealer’s best-execution duty. Without it, FINRA Rule 5310, which already requires brokers to use reasonable diligence to find the most favorable terms reasonably available, would carry the load. Critics warn that best-execution review would become harder to police and could advantage sophisticated order routers over smaller firms and retail investors.

When could the rescission take effect?

TD Cowen’s Washington Research Group estimates final adoption in the first quarter of 2027, after the comment period closes and the SEC completes its economic analysis. The agency may also grant exemptive relief to individual tokenization pilots before then, the route the same note says Atkins’s team is most likely to take.