SEC to Host Roundtable on the Order Protection Rule: Revisiting Two Decades of Reg NMS
The U.S. Securities and Exchange Commission will host a public roundtable on September 18, 2025 to examine the Order Protection Rule (Rule 611 of Regulation NMS), and its analogues in the listed options markets. The discussion will focus on the rule’s longstanding “trade-through” prohibitions, which require trading centers to establish reasonable policies and procedures designed to prevent trades from occurring at prices inferior to protected quotations, subject to a web of exceptions.
Background on Rule 611
Adopted in 2005 as part of Reg NMS, the Order Protection Rule was intended to strengthen investor protection and promote fair access by mandating that markets respect the best displayed prices across trading venues. Supporters argued that the rule enhanced transparency and competition. Critics, however, saw it as a blunt government intervention that could hinder efficiency and innovation in the markets. The rule applies not only to NMS stocks but also—through coordinated plans—to listed options.
Commissioner Atkins’ Longstanding Criticism
The roundtable announcement carries particular significance given SEC Chairman Paul S. Atkins’ history with Reg NMS. As a Commissioner in 2005, Atkins—alongside Commissioner Cynthia Glassman—issued a strong dissent to the adoption of Reg NMS, and specifically Rule 611. He warned at the time that the rule was “unnecessary and anti-competitive,” likely to distort natural market dynamics and invite gamesmanship around regulatory loopholes rather than enhancing liquidity.
In response to yesterday’s announcement, Chairman Atkins echoed those same concerns:
“Reg NMS and its Rule 611 have not served investors or broker-dealers well, given the market distortion and resulting gamesmanship by those that seek to take advantage of the Reg NMS structure. It is incumbent upon the Commission to give the public an opportunity to weigh in on items in our rulebook that deserve a refresh.”
His remarks underscore a continuity of skepticism dating back twenty years, and they raise the question of whether the intervening experience with Reg NMS has validated those early warnings.
Unintended Consequences and Market Gamesmanship
Critics of Rule 611 argue that instead of fostering a more competitive environment, it has encouraged market participants to exploit the complex framework of “protected” versus “non-protected” quotations. Liquidity has shifted into areas not covered by the rule, and some strategies have emerged solely to navigate or arbitrage its exceptions. These dynamics, according to critics, demonstrate the hazards of rigid regulatory intervention in a fast-evolving marketplace.
Looking Ahead
The September roundtable will provide an opportunity for the SEC, market participants, and the public to revisit the policy rationale behind Rule 611 and to assess whether it remains fit for purpose in today’s markets. With nearly two decades of data and experience, stakeholders can weigh whether the original concerns about anti-competitiveness and distortion were prescient—or whether Rule 611 continues to serve a vital role in ensuring fair and efficient trading.
The event will be open to the public at the SEC’s Washington, D.C. headquarters and streamed live on SEC.gov. Members of the public are also invited to submit written comments under File Number 4-862, which will become part of the public record.
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