SEC Proposes Rescission of Regulation NMS Rules 611 and 610(e)

What Changed

• - The SEC proposes to rescind Rule 611 of Regulation NMS (17 CFR 242.611), which currently requires trading centers to establish, maintain, and enforce written policies and procedures reasonably designed to prevent trade‑throughs of protected quotati
• The rescission would eliminate the current requirement on trading centers to prevent executions at prices inferior to protected quotations displayed on other trading centers, subject to the present set of exceptions.
• The SEC proposes to rescind Rule 610(e) of Regulation NMS, which currently imposes caps on access fees that trading centers may charge for the execution of quotations in NMS stocks, intended to harmonize quotation pricing across venues.
• The proposal would remove the regulatory framework that links protection of top‑of‑book quotations with capped access fees, allowing market forces and competition to shape routing behavior, fee structures, and displayed liquidity incentives instead o
• The proposal would likely be accompanied by conforming amendments to related definitions and cross‑references in Regulation NMS that currently rely on or reference Rules 611 and 610(e).
• The SEC indicates that the intended effects include reducing compliance and technology costs associated with enforcing anti‑trade‑through protections and access‑fee caps, and mitigating unintended consequences of Rule 611, such as fragmented routing

Suggested Considerations

• Map all current policies, procedures, and controls that explicitly reference or rely on Rule 611 (Order Protection Rule) and Rule 610(e) (access fee caps), including best‑execution frameworks, routing policies, fee schedules, and surveillance rules.
• Conduct a system inventory of smart order routing, execution algorithms, and venue connectivity logic that prevents trade‑throughs of protected quotations and enforces access‑fee caps, and identify components that would need redesign if Rules 611 and 610(e) are rescinded.
• Review and, if necessary, update best‑execution policies and client disclosures to decouple best‑execution rationales from mechanical Rule 611 compliance, preparing a framework that can operate in an environment without trade‑through prohibitions or fee caps.
• Enhance governance processes to monitor the SEC rulemaking, assign ownership (e.g., to a market structure working group), and prepare internal impact assessments and board‑level briefings on potential business, conduct, and conflict‑of‑interest implications of rescission.
• Develop scenario analyses and playbooks describing how routing strategies, venue selection, and payment‑for‑order‑flow or other economic arrangements would be adjusted in the absence of Rule 611 and Rule 610(e).
• Strengthen conduct and conflicts‑of‑interest controls around order routing and venue selection (including surveillance for abusive routing practices) to mitigate legal and reputational risk if economic incentives become more influential in routing decisions post‑rescission.

Key Dates

Who is Affected