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SEC proposes dropping two rules that shape stock order routing
Comments are due Aug. 17 on a plan that would remove the trade-through rule and the ban on locked or crossed quotes. The commission says the overhaul could cut costs and reduce market-fragmentation pressure.
For investors whose orders get routed from one exchange to another, the basic question is whether the rules meant to protect the best available price still help, or just slow everything down. In Washington, the Securities and Exchange Commission wants to rescind two core pieces of Regulation NMS, the National Market System framework that governs how NMS, or National Market System, stock orders are handled across venues.
The proposal would erase Rule 611, the trade-through rule that is supposed to keep trades from skipping past a better displayed price on another venue, and Rule 610(e), which deals with locked and crossed quotations, the moments when quotes collide or conflict across markets. The SEC would also remove certain defined terms and make related conforming changes elsewhere in the rulebook.
The rules at issue
Rule 611 and Rule 610(e) sit at the center of how broker-dealers, market makers, exchange operators and institutional investors move orders through a fragmented market. They shape where an order can go, what price it can hit and how a firm has to think about routing when several venues are showing competing quotes.
The SEC says those same rules have helped produce more cost, more market-structure complexity, tighter limits on order-handling and execution choices, and more exchange proliferation and trading fragmentation. That is the agency’s case for tearing them out rather than patching them again.
A market with looser rails
If the proposal becomes final, the practical change would be felt in the mechanics of trading rather than in headlines on the tape. Brokers and market makers could have more room to choose how they handle orders, but exchange competition would also rest on a looser set of federal guardrails.
That is why this is more than a technical clean-up. The SEC is asking whether the old rules still protect investors in a fast, automated market, or whether they now stand in the way of cheaper and simpler execution. Comments are due on or before Aug. 17, 2026.
The public window is open
The proposal is now out for comment, and the answer will matter far beyond lawyers parsing rule text. If the SEC follows through, the stock-market rulebook would lose two of the provisions that have long shaped how trades are routed and how venues are forced to interact with one another.