SEC Proposes Landmark Rescission of Regulation NMS Rules 610 and 611: A New Era for U.S. Equity Markets

WASHINGTON, D.C. — June 11, 2026 — In a move that signals the most significant shift in U.S. market architecture in twenty years, the Securities and Exchange Commission (SEC) announced today that it has formally proposed amendments to rescind Rules 611 and 610(e) of Regulation National Market System (NMS). This pivotal decision marks a retreat from the "Order Protection Rule" and the "Access Fee Cap," policies that have served as the bedrock of American stock market regulation since their implementation in the mid-2000s.

The proposal, which aims to untangle the complexities of modern market structure, seeks to dismantle the regulatory framework that critics have long argued forced artificial fragmentation, stifled competitive innovation, and imposed hidden costs on institutional and retail investors alike.

Main Facts: The Proposed Regulatory Overhaul

The SEC’s proposal centers on the elimination of two specific mandates that have defined the trading landscape for two decades:

1. Rule 611 (The Order Protection Rule): This rule requires trading centers to establish, maintain, and enforce written policies and procedures reasonably designed to prevent "trade-throughs"—the execution of orders at prices inferior to those displayed on another market. By rescinding this, the SEC is effectively ending the federal mandate that forces orders to be routed to specific venues solely based on the National Best Bid and Offer (NBBO).
2. Rule 610(e): This rule currently caps the fees that trading venues can charge for access to their "protected" quotes. With the rescission of the protection mandate, the Commission argues that the justification for federal price-setting on access fees diminishes, potentially allowing for a market-driven fee structure.

The SEC contends that these regulations, while well-intentioned in 2005, have resulted in a "check-the-box" compliance culture that prioritized speed and latency arbitrage over true price discovery and liquidity depth.

Chronology: From Regulation NMS to the 2026 Rescission

To understand the magnitude of today’s announcement, one must look back at the historical arc of U.S. equity markets.

The 2005 Watershed

Regulation NMS was adopted in 2005 to modernize the national market system. Its primary goal was to ensure that investors received the best price available across various exchanges, fostering competition between the New York Stock Exchange (NYSE), the Nasdaq, and the nascent electronic communication networks (ECNs).

The Era of Fragmentation (2010–2020)

As trading became increasingly digitized, the unintended consequences of Reg NMS became apparent. The "Order Protection Rule" led to a proliferation of exchanges, as firms created new venues to capture market share by offering rebates—a practice subsidized by the very regulations designed to protect investors. By 2015, the "Flash Boys" era highlighted how high-frequency trading (HFT) firms exploited the gaps created by these complex routing requirements.

The Review Period (2021–2025)

Following years of criticism from academic researchers and market participants, the SEC initiated a series of "roundtables" and "market structure advisory committees" starting in 2021. Throughout 2024 and 2025, the Commission engaged in rigorous data collection, studying the "latency wars" and the impact of fragmented liquidity on retail execution quality.

Today’s Proposal (June 11, 2026)

Following the Commission’s vote this morning, the proposal has been released for a 60-day public comment period. This marks the beginning of the end for the Reg NMS era, setting the stage for a decentralized, competitive market model.

Supporting Data: Why the SEC is Acting Now

The SEC’s proposing release provides a deep dive into the data that necessitated this shift. Several key indicators influenced the Commissioners’ decision:

• Increased Complexity Costs: Internal SEC analysis suggests that the cost of maintaining routing systems to comply with Reg NMS now accounts for nearly 12% of the average broker-dealer’s technology budget.
• Declining Liquidity Depth: Data shows that while the number of trading venues has increased by 40% since 2005, the "average order size" on public exchanges has plummeted. Liquidity has become increasingly "thin," forcing institutional investors to slice orders into thousands of smaller pieces to avoid alerting the market—a direct result of the fragmented environment fostered by Rule 611.
• The "Rebate Trap": The SEC’s report highlighted that nearly 35% of order routing decisions are currently influenced by maker-taker rebate structures rather than the actual quality of the execution venue, suggesting that the current rules incentivize volume over value.

Official Responses: A Divided Regulatory Landscape

The proposal has drawn swift reactions from across the financial sector, reflecting the deep divisions regarding the future of market structure.

Chairman Paul S. Atkins: A Call for Innovation

In his opening statement, SEC Chairman Paul S. Atkins articulated a philosophy of "market-led evolution."

"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," Atkins stated. "This proposal is intended 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."

Dissenting Voices and Cautionary Notes

Not all market observers are convinced. Some consumer advocacy groups have warned that removing the Order Protection Rule could lead to a "race to the bottom," where retail investors might be steered toward inferior execution venues that offer higher kickbacks to brokers. "We are moving from a system of mandated protection to a system of caveat emptor," noted a lead researcher at a prominent D.C.-based financial think tank.

Industry Feedback

Market makers have generally expressed cautious optimism. Many firms have argued that the removal of Rule 611 will allow them to prioritize price improvement over simple price matching, potentially leading to tighter spreads for retail investors. Conversely, some smaller regional exchanges have expressed concern that the removal of these protections could lead to a "liquidity consolidation" into a few dominant, massive venues, effectively reversing the goals of the original 2005 legislation.

Implications: The Future of U.S. Equity Trading

The rescission of Rules 611 and 610(e) will likely trigger a massive shift in how broker-dealers and exchanges operate.

1. The Death of the "Latency War"

By removing the mandate to route to the "protected" quote, the need for millisecond-speed routing technology may diminish. If brokers are no longer legally required to chase a quote that may disappear in microseconds, the arms race for faster fiber-optic lines and proximity hosting may subside.

2. A Shift in Execution Quality Metrics

The industry will need to redefine "best execution." Without the NBBO as the primary anchor, firms will likely adopt more holistic metrics, such as "price improvement," "fill rate," and "market impact cost." This will require a greater degree of transparency from brokers, who will have to justify their routing decisions based on performance rather than regulatory compliance.

3. Market Consolidation vs. Diversification

The market is expected to undergo a period of consolidation. Smaller, non-competitive exchanges may struggle to retain volume without the regulatory "crutch" of being a protected venue. However, this may also give rise to specialized, niche liquidity pools that offer unique value propositions to specific types of investors, such as long-term pension funds or ESG-focused institutional accounts.

4. Regulatory Vigilance

While the SEC is moving toward deregulation, the Commission has made it clear that it will not be stepping away from market oversight. Chairman Atkins emphasized a "careful, deliberative approach," suggesting that the SEC will increase its monitoring of broker-dealer routing practices to ensure that investors are not being harmed by conflicts of interest in the new, less-regulated environment.

Conclusion: A New Chapter

As the industry prepares for the 60-day comment period, the conversation is shifting from "how do we comply?" to "how should we trade?" The rescission of Rules 611 and 610(e) represents a profound experiment in market design. By choosing to step back and allow competition to dictate the structure of the U.S. equity markets, the SEC is betting that the invisible hand of the market is more efficient than the regulatory hand of the government.

The public comment period will remain open until August 10, 2026. The Commission encourages all stakeholders—from retail investors to global high-frequency trading firms—to submit detailed data and analysis to inform the final rule-making process. The outcome of this initiative will undoubtedly shape the trajectory of global finance for the next generation.