The SEC is Through with the Trade-Through Rule

Short summary

The SEC proposed rescinding the Trade-Through Rule (Rule 611), a 21-year-old regulation requiring traders to execute at best-quoted prices across exchanges. The rule inadvertently increased exchange fragmentation and pushed trading off-exchange. The Commission argues technology and market interconnection now eliminate the need for this regulatory mandate, favoring market-driven solutions instead.

• •SEC proposes rescinding Rule 611 after 21 years as the cornerstone of equity market structure
• •Unintended consequences: rule triggered exchange proliferation and migration of trading to off-exchange venues
• •Rationale: interconnected automated markets and technology obsolete the regulatory requirement; market forces should determine structure

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