SEC Moves to Rescind Regulation NMS Pillars: A New Era for U.S. Equity Market Structure

WASHINGTON, D.C. — June 11, 2026 — In a move that signals the most significant regulatory pivot in the history of modern electronic trading, 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 (Reg NMS).

The proposal, which arrives exactly two decades after the implementation of the landmark 2005 market structure overhaul, aims to dismantle the "Order Protection Rule" and the "Access Fee Cap." By proposing to remove these regulatory guardrails, the Commission is signaling a fundamental shift in philosophy: from a top-down, mandate-driven market structure toward a decentralized, competition-based model.

The Core Proposal: Deconstructing the "Trade-Through" Mandate

At the heart of the SEC’s announcement is the desire to move away from the rigid technological mandates that have governed U.S. stock exchanges since 2006.

Rule 611, commonly known as the "Order Protection Rule," requires trading centers to establish, maintain, and enforce written policies and procedures reasonably designed to prevent "trade-throughs"—the execution of trades at prices inferior to those displayed by other trading centers. Proponents of the original 2005 rule argued it was necessary to ensure investors received the "best price" regardless of which exchange they used.

However, critics—and now the Commission itself—have argued that the rule fostered a fragmented market ecosystem where speed of execution became the only metric that mattered, often at the expense of liquidity and price discovery.

Rescinding the Access Fee Cap

Simultaneously, the SEC has proposed the removal of Rule 610(e), which caps the fees that exchanges can charge for accessing their liquidity. By eliminating this cap, the SEC intends to allow market forces—rather than government-set price ceilings—to dictate the cost of interacting with various trading venues.

Chronology of a Regulatory Evolution

To understand the weight of today’s announcement, one must look at the timeline that brought the U.S. equity markets to this juncture.

• 2005: The SEC adopts Regulation NMS, introducing the Order Protection Rule (Rule 611) to unify the disparate trading floors and electronic networks into a single, cohesive "National Market System."
• 2010: The "Flash Crash" of May 6th highlights the fragility of the new, highly automated, and fragmented market structure, leading to the introduction of circuit breakers.
• 2014: High-frequency trading (HFT) becomes a lightning rod for political scrutiny following the publication of Michael Lewis’s Flash Boys, putting pressure on the SEC to address market fairness.
• 2019-2022: The SEC initiates a series of "roundtables" on market structure, beginning to question whether the 2005 mandates have outlived their utility.
• 2024: A year of intense lobbying from institutional investors and retail brokerage firms, both expressing frustration with the complexities of the National Best Bid and Offer (NBBO) mechanism.
• June 2026: The Commission officially proposes the rescission of Rules 611 and 610(e), signaling a return to a more permissive, innovation-focused market architecture.

Supporting Data: The Case for Regulatory Reform

The Commission’s decision to move toward rescission is backed by two decades of performance data that, according to Chairman Paul S. Atkins, suggest the costs of Reg NMS have begun to outweigh the benefits.

Fragmentation and Complexity

Data indicates that in 2005, the U.S. market was consolidated across a few major exchanges. Today, the market is fragmented across more than a dozen public exchanges and dozens of "dark pools" and internalizing broker-dealers. The administrative cost of complying with the trade-through requirements has led to a technological "arms race," where firms spend billions on microwave towers and fiber-optic cables simply to gain microsecond advantages to comply with the letter of the law.

The "Best Execution" Fallacy

Research cited by the Commission suggests that while Reg NMS aimed to protect the "best price," it often resulted in "latency arbitrage." Market participants frequently find that by the time they route an order to a protected quote, that quote has disappeared, resulting in failed fills or slippage. The Commission argues that removing the mandate will allow for "depth-of-book" competition, where investors can choose venues based on reliability and liquidity rather than just the lowest displayed price.

Official Responses: A Divided Financial Community

The proposal has ignited an immediate and intense debate across Wall Street, Capitol Hill, and the academic community.

Chairman Paul S. Atkins’ Perspective

"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," Chairman Atkins stated during the press conference. "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

While many institutional firms applaud the move toward deregulation, some consumer protection groups have raised alarms. Critics argue that rescinding the Order Protection Rule could lead to a "race to the bottom" where retail investors are routed to venues that pay the highest rebates to brokers (payment for order flow) rather than the venues offering the most favorable execution.

"We are entering an era of radical uncertainty," said one prominent analyst. "While the current system is flawed, it provided a baseline of protection. Removing it without a robust alternative could exacerbate the information asymmetry between retail traders and sophisticated high-frequency shops."

Implications for Market Participants

The implications of this proposal are far-reaching, potentially touching every corner of the financial sector.

Impact on Exchanges

For traditional exchanges like the NYSE and Nasdaq, the removal of the access fee cap is a significant win. These venues have long argued that the fee caps prevented them from competing effectively with non-exchange venues. Expect a period of intense experimentation with pricing models as exchanges attempt to capture more order flow.

Impact on Retail Brokerages

Retail brokers may face a total overhaul of their "best execution" policies. Without a federal mandate to protect the NBBO, brokers will be required to provide greater transparency regarding how they select venues for client orders. This will likely lead to a new standard of fiduciary duty that focuses on realized execution quality rather than mere technical compliance.

The Innovation Opportunity

By removing the regulatory "straightjacket," the SEC is essentially inviting the industry to build a 21st-century trading infrastructure. We may see the rise of new decentralized trading protocols, blockchain-based settlement layers, and AI-driven liquidity providers that were previously hampered by the rigid requirements of the 2005 rules.

The Path Forward: Public Commentary and Implementation

The proposal is not yet law. The SEC has opened a 60-day public comment period following the publication of the proposing release in the Federal Register.

The Commission has emphasized that it intends to take a "careful, deliberative approach." This suggests that the final rules may include transition periods or "soft launch" phases to ensure that the dismantling of the old infrastructure does not trigger market volatility.

The task ahead for the SEC is immense. They must balance the need for market efficiency with the imperative of investor protection. As Chairman Atkins noted, the goal is to "avoid repeating the same mistakes that brought us here."

For the next two months, the financial world will turn its eyes to Washington. Industry leaders, academics, and retail investor advocates are expected to file thousands of pages of commentary. Whether this proposal serves as the catalyst for a new golden age of American capital markets or creates a period of unforeseen instability remains the defining question of the year.

For further information on the proposed amendments and to view the full text of the proposing release, visit the SEC’s official website at sec.gov.