SEC proposes scrapping Rule 611, which requires trades to match the best visible stock price, drawing backing from Robinhood.
Robinhood is supporting a Securities and Exchange Commission proposal to rescind Rule 611, known as the order-protection rule, which mandates that trades execute at the best publicly available price. The rule applies to hundreds of trading venues, including exchanges and off-exchange firms, ensuring compliance with the national best bid and offer (NBBO).
The SEC argues the rule may be outdated, while Robinhood claims it adds unnecessary complexity and fragments trading across too many platforms. The company asserts brokers would still prioritize best execution for clients even without the rule. The debate involves retail brokers, exchanges, market makers, and firms exploring tokenized stocks.
Critics of Rule 611 contend it no longer aligns with modern market structures, while supporters argue it protects investors from inferior trade executions. The SEC’s proposal has sparked industry-wide discussion on balancing transparency and efficiency.