Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Reg Nms topic
No spam. Unsubscribe anytime.
House subcommittee divides over whether to modernize or keep Rule 611 as-is
Summary
A House Financial Services subcommittee hearing drew competing views on whether to revise or rescind Rule 611 of Regulation NMS: witnesses argued alternately that the rule hinders competition and innovation or that removing it would fragment markets, weaken price discovery and harm investor confidence.
House members and market participants on Monday debated whether Regulation NMS — the federal framework that helps govern U.S. equity trading — should be overhauled, with focus on Rule 611, the SEC's trade-through or order-protection rule.
Chair Ann Wagner opened the Financial Services subcommittee hearing by saying Reg NMS was adopted two decades ago and that "it is time to consider how modernizing equity market structure requires updating Reg NMS." Ranking Member Brad Sherman countered that "the whole world chooses American markets" and warned against dismantling core protections.
Witnesses split sharply. Dr. Robert Battalio, a finance professor at Notre Dame, told the panel that competition and reputational incentives largely prevent harmful trade-throughs and suggested eliminating the cap on exchange access fees so markets could set optimal tick sizes; he told members that Rule 611 "is not needed" and recommended posting quotes net of access fees.
Matt Billings, president of Robinhood Financial and Robinhood Securities, said zero-commission trading and fractional investing have expanded retail participation and that "today's equity markets are working for retail investors." He supported reconsidering Rule 611 as part of a comprehensive, data-driven modernization while emphasizing brokers' continuing best-execution obligations under FINRA Rule 5310.
Representing exchange operators, Kevin Kennedy, executive vice president at Nasdaq, urged caution. He said displayed, transparent markets and the national best bid and offer (NBBO) are central to price discovery and investor confidence, and he warned that changing Rule 611 without simultaneously addressing related provisions (notably Rule 610 on access fees and Rule 612 on minimum price increments) could create unintended consequences.
Market-maker Matt McKenzie of Optiver (appearing for PTG Markets) proposed replacing or heavily revising Rule 611 with an outcomes-based best-execution framework, modernizing Rule 605 reporting, reforming the market-data formula to reduce quote credits, and updating interrelated rules together to avoid fragmentation.
Joseph Saluzzi, co-founder of Themis Trading, urged lawmakers to reject outright repeal. He argued that removing Rule 611 would not fix market fragmentation or the growth of off-exchange trading, and he defended the consolidated audit trail (CAT) as vital to policing insider trading and other abuses.
Lawmakers questioned whether stronger FINRA enforcement and better disclosure could substitute for Rule 611. Several members said FINRA Rule 5310 (best execution) could act as a backstop, but most witnesses agreed that any change to 611 should be considered systemwide to avoid undermining liquidity or price discovery.
No formal action was taken at the hearing. Chair Wagner closed by inviting additional written materials and asking witnesses to provide further responses; witnesses were asked to reply by June 24, 2026.
