Paul Atkins, Chairman of the US Securities and Exchange Commission, makes no bones about his desire to strike Rule 611, aka the trade-through rule or the order protection rule (OPR).

“I have opposed the Trade-Through Rule since its inception [in 2005] and have elaborated on my concerns, from this very stage and elsewhere, many times since then,” Atkins said last month. “While a central aim of Rule 611 was to incentivize displayed liquidity, we have seen trading activity increasingly occur elsewhere the last two decades. I am concerned that what the Rule rather incentivized was a proliferation of new trading venues, which in turn fragmented liquidity and created an increasingly complex, costly, and opaque marketplace for order execution.”

For the most part, market participants agree with the SEC’s proposed rescission of Rule 611.

The topic was discussed today at the Security Trader Association of New York’s annual meeting. On a Zoom call, Mark Davies, CEO of S3, queried Mett Kinak, Global Head of Equity Trading at T. Rowe Price, about operational realities and unintended market complexities of this potential regulatory shift.

Kinak, a long-time advocate for removing the rule, argues that OPR has outlived its usefulness. Introduced in an era of manual and transitioning markets, the rule aimed to prevent trade-throughs and encourage displayed liquidity. However, the modern trading ecosystem is highly automated and interconnected, rendering the prescriptive framework redundant.

Kinak, who has worked as a trader and market structure analyst since 2009, said: “OPR was always the one thing that stuck out stood out as something that I didn’t really fully understand why we needed … It felt like it was redundant.”

A primary critique raised by Kinak is that OPR effectively protects commercial, for-profit venues at the expense of market participants. By legally forcing brokers to connect to every protected quote, the rule has introduced structural complexities; eliminating OPR would streamline workflows and create a more efficient marketplace.

While supportive of the rescission, Kinak highlights a critical adjacent challenge: the preservation of a standardized National Best Bid and Offer (NBBO) as a reference point. Even in a non-protected world, the NBBO remains an essential “North Star” benchmark for transaction cost analysis (TCA), arrival price metrics, and best execution evaluations.

If the SEC removes protected quote status without providing a unified framework for the Securities Information Processor (SIP), the industry risks fragmentation. If individual broker-dealers utilize different data sources to calculate their own independent best bids and offers, the consistency of the benchmark degrades.

To prevent this variation, Kinak suggests implementing a market-share threshold for SIP participation. This framework would allow eligible, substantial venues to voluntarily contribute quotes and share in market data revenue, establishing a reliable, standardized benchmark without requiring mandatory trade protection.

A concern within the trading community is how the absence of Rule 611 will alter compliance obligations under FINRA’s best execution mandates. Currently, many buy-side firms conflate OPR compliance with best execution, relying on the fact that an order was filled within the NBBO.

Kinak stressed that best execution for institutional managers extends far beyond simply capturing the best displayed price on a 100-share retail order. Instead, institutional execution focuses on minimizing market impact, achieving fill certainty, and maximizing total block size over large-volume orders.

Transitioning to a non-protected environment will require a principles-based approach to compliance rather than a prescriptive one. While this shift may place a heavier documentation burden on the buy side to justify their routing decisions, it mirrors the operational framework already successfully deployed in European markets under MiFID II.

Market participants should not expect dramatic structural shifts on day one of a post-OPR regime. Because brokers are bound by strict fiduciary duties, routing behavior and venue connectivity will remain stable in the short term.

Over time, however, accumulated data will likely drive a more sophisticated evolution. Market participants will gain the flexibility to bypass inefficient venues, experiment with innovative trading protocols, and optimize execution quality based on empirical outcomes rather than regulatory mandates.

This article was generated with the assistance of Google Gemini. The content was reviewed, edited, and fact-checked by Traders Magazine editorial staff.