By Pevita Pearce 
WASHINGTON, D.C. – June 11, 2026 – In a move that signals the most significant overhaul of U.S. equity market architecture in two decades, the Securities and Exchange Commission (SEC) announced today that it has formally proposed amendments to rescind Rules 611 and 610(e) of Regulation NMS.
The proposal, which marks a dramatic departure from the regulatory framework established in 2005, aims to dismantle the "Order Protection Rule" and the constraints on access fees that have defined modern high-frequency trading and market fragmentation. By stripping away these legacy requirements, the Commission seeks to shift the burden of market efficiency from centralized mandates to competitive, private-sector innovation.
The Core Proposal: Dismantling the Regulatory Infrastructure
At the heart of the SEC’s announcement is the proposed rescission of Rule 611—the "Order Protection Rule"—and Rule 610(e), which governs the limitation of access fees.
Rule 611 currently mandates that trading centers establish, maintain, and enforce policies reasonably designed to prevent "trade-throughs"—transactions that occur at prices inferior to the best available displayed quotes across the national market system. Proponents of the original 2005 rule argued it was necessary to protect retail investors from being ignored by dark pools and fragmented exchanges. However, critics, including current SEC leadership, contend that the rule has resulted in a "complexity trap," forcing firms to build expensive, latency-sensitive technology to route orders across dozens of disparate venues, ultimately increasing costs for all participants.
By rescinding Rule 610(e), the Commission is also taking aim at the cap on access fees that exchanges charge to interact with their quotes. The SEC’s current stance is that these price controls have distorted the economic incentives of exchanges, leading to a "maker-taker" fee structure that may not accurately reflect the true cost of liquidity.
A Two-Decade Chronology: From Innovation to Stagnation
To understand the magnitude of today’s announcement, one must look back at the trajectory of the National Market System (NMS).
2005: The Birth of Reg NMS
Following the rapid transition from floor-based trading to electronic execution, the SEC adopted Regulation NMS to modernize the U.S. equity markets. The goal was to ensure that investors received the "best execution" possible by creating a unified, interconnected market. Rule 611 was the centerpiece of this effort, ensuring that an order could not be executed at a price worse than what was displayed on any other exchange.
2006–2015: The Rise of Fragmentation
The years following the implementation of Reg NMS saw an explosion in the number of trading venues. As firms sought to bypass the fees and latency associated with major exchanges, dark pools and alternative trading systems (ATS) proliferated. While intended to provide liquidity, this created a fragmented landscape where the "best price" became increasingly difficult to define and execute.
2016–2025: Calls for Reform
As trading speeds moved into the microsecond and nanosecond realms, market participants and academics began questioning the relevance of Rule 611. Institutional investors complained that the rule forced them to "chase" quotes that often disappeared before an order could be filled, a phenomenon known as "flickering quotes."
2026: The Paradigm Shift
Today’s proposal represents the culmination of years of internal debate. Chairman Paul S. Atkins, leading a Commission focused on deregulation and market simplification, has determined that the costs of maintaining these rules—both in terms of technological friction and stifled innovation—far outweigh their intended benefits.
The Rationale: Why Now?
In his remarks during the public session, SEC Chairman Paul S. Atkins offered a scathing critique of the status quo.
"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."
The SEC’s staff memo accompanying the proposal suggests that the market has evolved beyond the need for "intermarket protection." With the advent of sophisticated routing algorithms and AI-driven execution engines, the Commission argues that brokers already possess the tools to seek the best price without the SEC requiring them to do so through rigid, hard-coded rules.
Supporting Data: The Case Against the Status Quo
While the SEC has not yet released the full data sets that informed this decision, the proposing release references several key performance indicators (KPIs) that suggest the current market structure is underperforming:
- Latency Arbitrage: Data indicates that a significant percentage of retail order flow is subject to "latency arbitrage," where high-frequency firms capitalize on the millisecond gaps between the centralized consolidated feed and private exchange feeds.
- Market Complexity Index: The SEC’s internal metrics show that the number of "order types" offered by major exchanges has increased by 400% since 2005, a direct result of exchanges competing to comply with—and navigate—Reg NMS requirements.
- Liquidity Costs: Despite claims of "better prices," the cost of executing large institutional blocks has increased by approximately 15% in real terms since 2010, as the fragmentation of liquidity makes it harder to find a single counterparty for large trades.
Official Responses and Industry Sentiment
The announcement has triggered a wave of reactions across the financial services industry, reflecting the deep divisions in how market structure should be governed.
The Exchange Perspective
Major exchange operators, who have spent years building systems compliant with Rule 611, are reportedly cautious. While many support the removal of access fee caps, they warn that the total rescission of the Order Protection Rule could lead to "price discovery fragmentation," where the national best bid and offer (NBBO) becomes a purely theoretical concept rather than a functional guide for investors.
The Broker-Dealer View
Large brokerage houses and retail-focused firms have largely welcomed the news. For these firms, the regulatory burden of maintaining "Reg NMS compliance" is a significant line item in their annual IT budgets. By simplifying the rules, these firms hope to reduce their compliance overhead and potentially pass those savings on to retail investors in the form of lower commissions.
The Investor Advocate View
Investor advocacy groups have expressed skepticism. Their primary concern is that the removal of the Order Protection Rule will leave retail investors vulnerable to being "traded through" by institutional players who have faster access to data. "The SEC is essentially saying that the market will police itself," noted one prominent market analyst. "In a world of predatory algorithms, that is a dangerous gamble."
Implications for the Future of Equity Markets
The rescission of Rules 611 and 610(e) would represent a fundamental "return to market-based discipline." If the proposal is adopted, the following changes are anticipated:
1. Competitive Pricing Models
Without the cap on access fees, exchanges would be free to set their own pricing models. This could lead to a "race to the bottom" in terms of costs for some, or the development of premium-priced, high-integrity venues for others.
2. Streamlined Routing
Brokers will no longer be legally required to route orders to venues simply because they show a superior price for a single share. This will allow for "smart routing" that prioritizes liquidity and execution probability over nominal price, potentially reducing the prevalence of "flickering quotes."
3. Increased Venue Innovation
The current regulatory environment encourages homogeneity among exchanges, as they all strive to comply with the same standards. A deregulated environment may encourage the rise of new, specialized trading venues that cater to different asset classes or trading strategies, fostering a more diverse and resilient market ecosystem.
Conclusion: The Path Ahead
The SEC has opened a 60-day public comment period following the publication of the proposal in the Federal Register. During this time, the Commission will be forced to grapple with a barrage of technical analysis, lobbying efforts, and impassioned testimony from stakeholders on all sides of the debate.
"I look forward to reviewing public comments as we take a careful, deliberative approach to avoid repeating the same mistakes that brought us here," Chairman Atkins concluded.
For now, the financial world waits. The proposed rescission of Regulation NMS components is not merely a change in administrative policy; it is a declaration that the era of government-mandated market structure is giving way to a new, more volatile, and potentially more efficient age of algorithmic competition. Whether this move restores the integrity of the U.S. capital markets or invites a new era of fragmentation remains the central question of the year.
For more information, visit the official SEC rulemaking portal to review the full text of the proposal and submission guidelines for public comment.
Reynand Wu 
Evan Lee Salim