SEC Chairman Paul Atkins Proposes Repeal of Core Rules 611 and 610(e) of Regulation NMS
The U.S. SEC has proposed to repeal two core rules of Regulation NMS: Rule 611 (best execution protection) and Rule 610(e) (prohibition of locked or crossed quotes), aiming to simplify market structure and promote the long-term development of U.S. capital markets.
SEC Chairman Paul Atkins stated that the proposal will reduce trading costs and drive structural evolution through competition and market mechanisms; these two rules were established in 2005, with Rule 611 requiring execution at the best price and Rule 610(e) prohibiting locked crosses to maintain price discovery efficiency.
Institutions and high-frequency trading capital are accelerating their adaptation to the simplified framework, with market makers and investors seeking low-cost execution benefiting from the relaxation of rules, while traditional participants relying on protective mechanisms are under pressure, leading capital to flow towards more competitive and flexible market structures, enhancing the overall pricing efficiency of U.S. capital markets.
Source: Public Information
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Paul Atkins has previously promoted regulatory iterations across multiple fields as a crypto-friendly regulator. This Regulation NMS reform continues the SEC's path from fragmented protection established in 2005 towards competition-driven evolution. The rules have been evaluated multiple times for their impact on market liquidity since the rise of high-frequency trading, but they also face controversies regarding execution complexity and fairness.
On the capital path, the SEC is soliciting market feedback through the proposal, motivated by a desire to reduce compliance burdens and enhance overall efficiency. By simplifying rules, the SEC aims to attract more liquidity and innovative participation, concentrating resources on exchanges and trading platforms that adapt to the new structure to optimize capital allocation.
Similar to multiple market structure adjustments post-2010, the U.S. securities trading industry is at a critical stage of transitioning from strict protective rules to a competition-prioritized framework. Paul Atkins' proposal is testing long-term growth potential.
Essentially a regulatory change, the repeal of core protective rules will shift trade execution from mandatory best execution to market-driven competition, leading to a transfer of pricing power and liquidity to efficient execution platforms. This will accelerate the free flow of capital across U.S. markets through cost reductions and mechanism evolution, forcing participants to restructure strategies under the new rules to maintain competitiveness.
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