SEC Seeks to Scrap Best-Price Rule
By Dean Seal
The Securities and Exchange Commission said it wants to scrap a 2005 rule that calls for trading platforms to execute buy and sell orders at the best possible price.
The agency on Thursday proposed the elimination of the trade-through rule, which forbids platforms from completing a trade at a price that is worse than the best available price across all U.S. exchanges, even if that means filling the order at a competing market.
According to the SEC, the rule made more sense when electronic trading systems were slower and more poorly connected than they are today.
"Currently, the U.S. equity markets are highly automated and interconnected and the Commission's concerns expressed at the time of [the rule's] adoption in 2005 regarding the lack of mechanisms to connect markets is no longer an issue," the SEC wrote in its proposal.
The regulator also argues that the rule has forced brokers to buy expensive market data feeds linked to a bevy of exchanges, including overlapping ones that proliferated as a direct result of the rule.
SEC Chairman Paul Atkins has been opposed to the rule since it was instituted in 2005, when he was a commissioner who voted against it alongside a fellow Republican appointee. The measure passed with the support of then-Chairman William Donaldson, also a Republican, and the commission's two Democrats.
Atkins and SEC's two other commissioners now argue that stockbrokers already have a strict legal duty to execute trades with the most favorable terms for their clients, making the trade-through rule superfluous.
Doing away with the rule would save the brokerage industry $54.2 million to $77 million annually, largely from reducing compliance costs and being able to disconnect from certain exchanges, the SEC said. The industry would only have to pay about $48.2 million total to implement the rule change across their systems, the agency said.
The SEC is giving the public 60 days to comment on its proposal.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
June 11, 2026 14:02 ET (18:02 GMT)
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