Press Releases

Yesterday, the House Financial Services Subcommittee on Capital Markets, led by Chairman Ann Wagner (MO-02), examined America’s equity markets to ensure the United States sustains its global leadership, superior liquidity, and retail accessibility. 

On Revisiting Regulation National Market System (NMS) and Rule 611:

Full Committee Chairman French Hill (AR-02) said, “We've been talking about Chairman Atkins’ issue of calling the Order Protection Rule a misnomer, that it actually encourages market fragmentation. That's his assertion. If the Commission were to rescind 611, as you've talked about today, could a strengthened, data-driven FINRA Best Execution standard provide better outcomes for retail investors by looking at speed and fill probability over a narrow, top of book price?”

Subcommittee Chairman Wagner said, "Revisiting central tenets of Reg NMS, such as Rule 611, also known as the 'Trade-Through Rule,' will allow us to properly assess the effectiveness of market regulations and address any inefficiencies. Does a growing number of exchanges increase competition or just increase compliance costs? Are obstacles standing in the way of innovative new entrants into the market? Is Rule 611 securing the best outcome for investors? These questions all deserve careful consideration. Competitive and dynamic equity markets are directly tied to capital formation, and regulations should facilitate new offerings rather than throw sand into the market’s gears.”

On Maintaining Competitive and Dynamic Capital Markets:

Subcommittee on National Security, Illicit Finance, and International Institutions Chairman Warren Davidson (OH-08) said, “Our capital markets have remained dynamic. They're the envy of the world. We've got, you know, half of the world's capital invested in them. And we're here talking about ways to keep them vibrant. When you look at demand … Robinhood's done maybe more to attract retail investors than just about anybody.”

Rep Troy Downing (MT-02) asked what would jeopardize zero-commission trading, to which Mr. Matt Billings, Vice President of Brokerage and President, Robinhood Financial and Robinhood Securities, answered, “I would just be careful that if something came about that drove costs back to us, then we would drive costs back to the customer. I would want to be cautious if somebody went after payment for order flow. It's a known industry standard for many, many decades. At this point in time, we handle it thoughtfully. We balance our payment-for-order-flow. We have an equal across all of our execution partners, so we mitigate any conflict of interest. So that affords us to provide the services that we provide and all the customer support… and how we conduct our business.”

Rep. Stutzman (IN-03) said, “Over the last 21 years, Hoosiers have greatly benefited from the highly competitive equity markets underpinned by Reg NMS. Market innovation has allowed for efficient price discovery, reliable investor access, accurate quote handling, and orderly clearing and settlement. The number of Americans participating in our equity markets is near an all-time high, and Americans are accessing these markets earlier in their lives, including my 24- and 20-year-old sons. That said, just because the system is working well doesn't mean there aren't improvements to be made.”

Rep. Zach Nunn (IA-03) said, “A teacher in Des Moines or a retiree in Adel can trade commission-free, same as the Wall Street desk can. But 21 years of patched-together rules have piled up. And I think that's what I'm hearing from this group right now. Just consider this: the number of U.S. broker-dealers dropped by almost 30% between 2010 and 2024, even as industry assets grew by nearly $2 trillion. Now, I think anybody can look at that and say that's consolidation, plain and simple, and I think it puts Main Street guys back in Adel, Iowa, in a harder spot.”

Witnesses Echoed the Work of the Committee:

Dr. Robert Battalio, Professor of Finance at the Mendoza College of Business, University of Notre Dame, said, “The extension of Rule 605 execution quality reporting to brokers means that any broker that systematically avoids taking liquidity at the lowest cost will incur/report higher trading costs. Prior research suggests that investors will avoid brokers with inflated trading costs as reported by Rule 605 reports. Moreover, trading through better displayed prices creates problems with the customer service desks of brokers. As a result, brokers review trades at the end of every day (with the help of firms like S3) and demand that executing venues adjust the prices of orders that could have interacted with cheaper liquidity.”

Mr. Billings said, “Rule 611 was designed for a market structure that no longer exists. When the SEC adopted Reg NMS in 2005, floor-based exchanges like the NYSE and American Stock Exchange were protected from competition by an earlier iteration of the trade-through rule within the Intermarket Trading System. Rule 611 was originally intended to dismantle that protection and accelerate the shift to electronic trading. Those one-time benefits, however, have long since been realized. Shortly after Reg NMS was adopted, the NYSE demutualized, embraced electronic quoting, and merged with Archipelago Exchange. The floor-specialist model that Rule 611 was designed to disrupt is largely gone. What remains is a rule built for a problem that no longer exists.”

Mr. Kevin Kennedy, Executive Vice President and Head of North American Market Services, Nasdaq, said, “The U.S. has highly liquid markets that support investment savings, capital formation, and more broadly the economic success of the country. Displayed quotes on lit exchanges are foundational to the NBBO and the success of our markets. Off-exchange dark markets, while serving a legitimate and important need in today’s ecosystem, leverage displayed quotes as a reference for their own non-displayed prices, but dark markets do not contribute to displayed pricing. For that reason, policies that weaken incentives to display liquidity degrade the benchmark (i.e., NBBO) that investors use to assess execution quality. A strong NBBO benefits everyone: retail investors, institutional investors, issuers, and brokers alike. It lowers transaction costs, narrows spreads, and supports the confidence and trust that investors have in market outcomes. As markets evolve, preserving the integrity and usefulness of the NBBO should remain a foundational objective.”

Mr. Matt MacKenzie, Head of U.S. Policy and Regulatory Affairs, Optiver, on behalf of PTG Markets, said, “…[R]emoving or substantially revising Rule 611 would not leave investors in a vacuum. It would remove the rigid standard that is layered on top of a broader best execution framework. That broader framework is more adaptable because it asks whether an order received a favorable outcome under prevailing market conditions, not merely whether the routing process satisfied a mechanical protected-quotation hierarchy.”

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