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Market Regulation · Order Protection · SEC · Stock Trading
The U.S. Securities and Exchange Commission (SEC) unanimously proposed to eliminate the "order protection rule," which mandates stock trades execute at the best available price, citing increased costs and complexity without sufficient benefit in today's technologically advanced markets.
The 2005 rule, also known as the "trade-through rule," prohibited trades at prices worse than those quoted elsewhere. SEC Chair Paul Atkins, who opposed the rule's inception, stated that technological advancements and market structure changes render it obsolete, driving up compliance and connectivity costs.
This proposal aligns with the Trump administration's broader plans to restructure securities markets. While this specific rule is targeted for removal, other regulations requiring price transparency from broker-dealers and trading venues remain in effect.
Better Markets, a financial oversight advocacy group, warned that rescinding the rule would result in "worse prices for people saving for retirement and more profits for securities firms and high-frequency traders." The proposal is now open for a 60-day public comment period before a final decision.
