In general, if a quotation is considered protected, other trading centers must honor that quotation by not executing trades at inferior prices, also known as "trading through," the protected quotation pursuant to the SEC Rule 611
(the Order Protection Rule).
Under the Securities and Exchange Commission (SEC) Rule 611 exchanges that have not matched a new National Best Bid and Offer (NBBO) can trade at the old NBBO for one second.
Any trades that execute at Benchmark Compliant Prices are not trade throughs under Rule 611.
Consequently, the SEC adopted the Benchmark Quote Exception, set forth in paragraph (b)(8) of Rule 611.
These orders may be executed at Benchmark Compliant Prices under SEC Rule 611.
opened the court to public comment on Rule 611 of the Michigan Rules of
172) Rule 611 creates the type of wholly discretionary
amendment to Rule 611 because it would "allow judges to
13) See Order Amending Rule 611 of the Michigan Rules of Evidence
NEW YORK -- TABB Group in a new report released today, "The Reg NMS Order Protection Rule: Preparing for the Impact," says implementing the Securities and Exchange Commission's Regulation NMS Order Protection Rule 611 will have an unprecedented and drastic impact on the equities markets.
Adds Tabb, "With the new regulations such as the intermarket sweep in Rule 611 acting as an enabler for improved routing, firms removing liquidity a fraction of a second faster will win.
The TABB report, in summarizing the National Market Structure (NMS) Rule 611 and its impact, explains the need for private linkages, how participants are repositioning themselves, the importance of being an exchange under the Order Protection Rule and the effect of the rule on best execution, intermarket routing and the various exemptions to the rule, including an intermarket sweep order.