SEC Moves to Scrap Reg NMS Trade-Through and Locking/Crossing Rules in Sweeping Market-Structure Overhaul

The Securities and Exchange Commission on June 11, 2026 proposed the most consequential rollback of U.S. equity market-structure rules in twenty years, voting to rescind Rules 611 and 610(e) of Regulation NMS and to strip related defined terms from Rule 600. Rule 611—the 'order protection' or trade-through rule—is the 2005 centerpiece of Reg NMS. It requires trading centers to maintain policies reasonably designed to prevent executions at prices inferior to a 'protected quotation' displayed on another venue. Rule 610(e) bars venues from displaying quotes that lock or cross the market. Together they hardwired intermarket price linkages across exchanges and ATSs. Chairman Paul Atkins argued the framework has outlived its purpose. '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,' he said, adding the proposal aims to 'simplify market structure and reduce costs' while letting 'competition, innovation, and other market forces' shape evolution. Commissioner Hester Peirce, in a statement pointedly titled 'Disorder Protection Rule,' backed the rescission, as did Commissioner Mark Uyeda. The Commission's theory is that today's automated, interconnected venues no longer need the prescriptive price-protection mandate written for the markets of 2005. If finalized, trading centers would no longer be obligated to route around or honor protected quotes, and locked/crossed displays would be permitted. Supporters say that reduces routing complexity, latency arbitrage and compliance burden. Critics warn it could fragment liquidity, weaken displayed-quote incentives and disadvantage retail investors who benefit from guaranteed best-price execution—the very protections Reg NMS was built to enforce. The proposal also carries an unexpected catalyst for digital assets. Galaxy Digital's Alex Thorn said scrapping Rule 611 could remove a key barrier for tokenized U.S. equities, since automated market makers executing through liquidity pools and bonding curves cannot readily comply with trade-through obligations. Analysts at The Block and elsewhere flagged the move as a potential 'unlock' for on-chain stock trading. The Street largely expects adoption. TD Cowen's Jaret Seiberg said repeal has been a long-standing Atkins priority and projected the SEC finalizes the rule in the first quarter of 2027. Implications cut both ways for listed-market operators. Exchanges Nasdaq (NDAQ), Intercontinental Exchange (ICE, NYSE's parent) and Cboe (CBOE) could see the competitive value of protected-quote status diminish, even as compliance costs fall. Wholesalers and electronic market makers such as Virtu Financial (VIRT) may gain routing flexibility but face a more fragmented quote landscape. The comment period runs 60 days from Federal Register publication. With a deregulatory majority at the Commission and industry momentum behind simplification, market participants are treating rescission as probable rather than speculative—setting up a 2027 transition that could redraw order-routing economics across both traditional and tokenized venues. Sources: SEC Press Release 2026-54; Atkins, Peirce and Uyeda statements; Traders Magazine; The Block; TD Cowen.