SEC Proposes Scrapping Reg NMS Trade-Through and Locked-Market Rules in Landmark Market Structure Overhaul

The Securities and Exchange Commission on June 11, 2026 proposed amendments to Regulation NMS that would rescind two foundational pillars of the U.S. equity market structure built two decades ago: Rule 611, the trade-through prohibition known as the Order Protection Rule, and Rule 610(e), which restricts the locking and crossing of quotations in national market system stocks. Rule 611 currently forces orders to route to the venue displaying the best price, barring executions that 'trade through' a superior protected quote elsewhere. Rule 610(e) prohibits market participants from posting quotes that lock (bid equals offer) or cross the national best bid and offer. The proposal would eliminate both, rescind related defined terms in Rule 600, and make conforming changes across Regulation NMS. SEC Chairman Paul S. Atkins framed the move as long overdue. '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 for market participants while allowing competition, innovation, and other market forces to shape the continuing evolution of our equity markets.' The proposal follows a September 2025 SEC roundtable on trade-through prohibitions. Critics of Rule 611 have long argued it entrenches a fragmented, latency-sensitive market dominated by high-speed routing and fuels reliance on the consolidated tape and proprietary data feeds. Removing it could let exchanges and alternative trading systems compete more directly on execution quality, speed and cost rather than being bound to mechanically chase the protected quote. For exchange operators, the implications are double-edged. Nasdaq (NDAQ), Intercontinental Exchange (ICE), parent of the NYSE, and Cboe Global Markets (CBOE) derive significant revenue from transaction routing, connectivity and market data tied to the current protected-quote regime. Loosening the rules could pressure some legacy revenue streams while opening room for new venue models and innovation. Electronic market makers such as Virtu Financial (VIRT) and Citadel Securities stand to gain flexibility in how they internalize and price order flow. Observers also note the deregulatory thrust dovetails with the SEC's broader push to accommodate tokenized and on-chain equities, where the rigid trade-through framework is seen as an obstacle to 24/7 and blockchain-based trading. If adopted, the changes would represent the most consequential rewrite of equity market structure since Regulation NMS took effect in 2005. The Commission is inviting public comment and data from the marketplace, with the comment window remaining open for 60 days after the proposing release is published in the Federal Register. The proposal is not yet final, and significant industry debate — and potential litigation — is likely before any rule takes effect. Sources: SEC Press Release 2026-54; SEC Open Meeting statements (Atkins, Uyeda); Traders Magazine; TradeInformer.