Rule 611, also known as the trade-through rule, sits at the heart of how we structure access and protection in the U.S. equity markets. This roundtable is an invitation to reexamine whether the rule still serves investors and the market as effectively as possible, and to consider what changes—if any—would better align execution quality with the realities of today’s trading landscape.
I’m sharing my own views as a Commissioner, independent of the SEC or my colleagues, and I want to thank all the panelists, the University of Austin for hosting, and the Commission staff from Trading and Markets and Public Affairs for pulling this event together on short notice. I also welcome the students in attendance—you bring a fresh perspective that can spark new ideas about equity market structure.
Rule 611 is a pivotal regulatory determinant shaping how trades are executed and how price discovery unfolds in the market. If you asked me to rate the desirability of revisiting Rule 611 on a 1-to-10 scale, I’d land somewhere in the middle: a 6 or 7. But a simple number doesn’t capture the nuance involved in such a decision.
To understand the stakes, we must consider several factors. First, the U.S. equity markets are unparalleled in depth and liquidity, which makes any reform particularly consequential. Second, as discussed by many participants at the September 18 roundtable, the distinctive nature of our markets means that lessons from other jurisdictions aren’t always applicable, especially when it comes to best execution and volume thresholds. Third, Rule 611 is embedded in a dense framework of related rules and systems governing how markets operate. Revisiting 611 means rethinking these connected rules as well. The message from the September roundtable was clear: any changes to Rule 611 must be considered in tandem with related NMS rules, NMS plans, and FINRA regulations. Today, we’ll explore potential changes to access fee caps, the prohibition on locked and crossed markets, the fair access rule, the SIP revenue model, FINRA’s best execution rule, and more. Fourth, the way we implement and sequence any changes matters greatly. With the expertise on this panel, I expect our discussion here to provide the necessary context to elevate my consideration of Rule 611 from 6 or 7 to a 10.
I have been skeptical of Rule 611 since its inception two decades ago. Dictating how market participants execute trades has rarely felt like the SEC’s strongest calling. People in free, transparent markets are often best left to determine execution venues and methods, or to seek professional guidance when needed. Rule 611 rests its authority on Section 11A of the Securities Exchange Act of 1975, which directed the SEC to help establish a national markets system. That mandate reflects a bygone era of heavy government intervention and market distrust. Rather than adopting Rule 611 decades after Congress granted this authority, one alternative would have been to let evolving technology gradually erode market monopolies and enable cross-market arbitrage. Even if you disagree with this point, you may still concede that Rule 611 has achieved its initial goals and may now be causing more unintended consequences than benefits. As highlighted in the prior roundtable, we now face a historic opportunity to strengthen our markets. While opinions differ on how effectively today’s market structure serves investors, one trend is undeniable: off-exchange trading is rising, and yet new exchanges—many of which imitate existing ones—continue to proliferate. This dynamic signals misaligned incentives and argues for reform.
I anticipate a constructive, organic conversation that requires little prompting, but I’d like to pose a few questions for panelists to address:
- If Rule 611 is viewed by some as a best-execution backstop, what best-execution clarifications or guidance could we craft to provide clarity without becoming overly prescriptive if we remove or alter 611?
- Are there best-execution clarifications that are needed now, independent of any changes to Rule 611?
- What is the optimal SIP revenue allocation between quoting and trading activity to curb exchange proliferation without stifling innovative new entrants in the exchange space? Could readjusting this allocation be an interim step on the path toward repealing Rule 611?
- Which SEC and FINRA rules would need modification if Rule 611 were repealed?
- If we propose changes to Rule 611, how should we sequence changes to related NMS rules, plans, and FINRA rules? Which changes must occur concurrently, which can follow, and which should precede alterations to Rule 611?
- As the SEC engages with market participants exploring tokenization, are there lessons from those efforts that might inform our consideration of Rule 611?
I’m looking forward to a productive, insightful discussion. Thank you for joining this conversation.
