FINRA’s Regulatory Notice 26-15 represents a fundamental administrative and microstructural misstep that attempts to erect an expansive, centralized command-and-control auditing regime over an unfinalized Federal legal vacuum. By conditioning its sweeping Best Execution (BestEx) overhauls on the passive assumption that the SEC will completely rescind Rule 611 and dismantle locked and crossed prohibitions under Rule 610(e), a.k.a. Order Protection Rules (OPR), FINRA is prematurely prejudging open SEC rulemaking under File No. S7-2026-20. This regulatory overreach seeks to force broker-dealers to absorb the costs, documentation burdens, and liability of a self-inflicted structural collapse. A fundamental limitation for policymakers pursuing evidence-based regulations is that every quantitative model faces a harsh trade-off between tractability and reality; liquidity is a moving target that no static framework can capture. If the foundational anchors of Reg. NMS are dismantled, the National Best Bid Offer will be legally stripped of its enforcement teeth, degrading the public consolidated tape into a series of unlinked, disconnected trading “echo chambers” streaming conflicting, uncoordinated prices. In this fragmented landscape, the public tape functions solely as one of the sources of access, not a universal anchoring reference price to depend on for compliance. Attempting to pass prescriptive, check-the-box routing standards, transaction-level mandates, or artificial safe harbors is a mathematical and statistical impossibility. Any attempt by FINRA to dictate how independent firms handle price improvement, verify connectivity, or navigate internalization mechanics will fundamentally morph a self-regulatory organization into a central-planning command economy, which destroys free-market pricing mechanics. This heavy-handed intervention directly contradicts the SEC’s stated principle under the current administration to encourage competing market forces to maintain the orderly function of the market and minimize regulatory intervention. FINRA cannot legally or logically restrict members’ engagement in activities that are explicitly or implicitly permissible under the SEC's policy choices. * The Invalidation of Safe Harbors and the “Europeanization” of US Markets: Proposing compliance-driven safe harbors under FINRA Rule 5310 is a futile exercise. Once the OPR pillar collapses, the definition of a single “best market” ceases to exist. The market will shift toward a fractured, Europeanized framework reminiscent of Europe’s deeply flawed MiFID II calibration regime, where rigid mathematical models misfired, perversely driving institutional volume away from transparent lit exchanges and into dark, unregulated pockets. * The Illegality of Transaction-by-Transaction Auditing Mandates: FINRA lacks statutory authority to mandate the order-by-order best execution review standard. Attempting to enforce a microscopic, transaction-level checking process directly contradicts established federal regulatory precedent. In 79 FR 5592 (Footnote 711) regarding the Dodd-Frank Volcker Rule, the joint regulatory agencies – including the SEC, CFTC, Federal Reserve, OCC, and FDIC – unequivocally rejected a “transaction-by-transaction” approach as “unduly burdensome,” “impractical,” and “inconsistent”. Fabricating an order-by-order standard against unlinked books creates an impossible compliance nightmare plagued by sub-millisecond sequence drift and artificial audit anomalies within the opaqued Consolidated Audit Trail (CAT). * The Cross-Asset Asymmetry and Derivative Blind Spots: The SEC and FINRA are operating in complete denial by trying to treat the equity and options markets as isolated, separate ecosystems. Options market makers do not quote derivatives in a vacuum; they survive by instantly delta-hedging their structural inventory risk using underlying NMS stocks. Completely unlinking equity protections while keeping the Options Order Protection NMS Plan active creates an uncompensated market asymmetry. To manage risk, firms rely heavily on CFTC-regulated futures, exotic derivative products, and complex cross-border sweeps executed through foreign affiliated entities – such as short-selling 23-hour E-Mini futures on CME Globex – all of which operate outside the statutory scope of the SEC and FINRA. Any attempt to pass rigid, equity-only routing standards ignores these vital global hedging loops and forces severe synthetic quote widening, perversely inflating transaction costs for investors. * The Reality of Algorithmic Warfare and Private Internalization: Real-world market participants are not passive bystanders; they are actively counting their own securities inventory and margin constraints, as well as those of their opponents. Forcing firms to disclose or standardize their “secret sauce” – such as automated Smart Order Routers (SOR), signal detection tools, and real-time obfuscation techniques used to play active defense or offense against toxic liquidity – is an invasive overreach. In an unprotected market, forcing uniform compliance parameters eliminates the “Variety” factor among the 4Vs of Big Data, creating synchronized algorithmic echo chambers that escalate the probability of flash crashes and systemic default cascades. * Boilerplate Retail Waivers versus Tactical Discretion: FINRA possesses the clear statutory authority to prohibit blanket, pre-emptive “not held” disclaimers embedded in new retail account documentation. These boilerplate waivers act as a predatory legal shield, allowing firms to systematically stall retail orders to pocket wider spreads or facilitate internal matching while claiming “discretionary immunity”. However, this contractual boundary is separate from the live algorithmic battleground. FINRA must stay out of micro-regulating real-time tactical order handling, signaling flags, and mid-flight re-categorizations (“held” to “not held” downstream), because the SEC provides absolutely no framework to judge underlying intent by realized economic outcomes – such as net-effective price improvement – rather than by mechanical routing semantics. * Technology-Specific Guidance Traps for AI and Tokenization: Standard tools like Transaction Cost Analyzer (TCA) and SOR are not the holy grail. Real-world market participants are actively counting the securities inventory and margin constraints of themselves and their opponents. Policy makers must recognize this microstructural reality rather than prescribing certain trade practices, technologies, or demanding additional data reporting requirements. Any added burden heightens the cost to transact in the US, eroding the competitiveness of US markets while completely failing to improve the trust factor if the market is left without OPR. FINRA should refrain from providing any BestEx guidance specific to the use of AI or tokenized securities. Before Congress and the Commissions sort through these jurisdictional entanglements, FINRA can only observe policy directions – not develop independent rules. Because an unprotected, crossed market tape strips broker-dealers of an objective baseline, FINRA must reject this arbitrary guidance expansion. FINRA’s objective enforcement boundaries would be narrowed to merely verifying the mechanical accuracy of public disclosures under SEC Rule 605 and Rule 606. If the regulators’ true objective is to deemphasize speed as a factor for trading success, the correct mechanism is mandating the use of time-lock encryption to make market data available securely in synchronized time across all venues. If the goal is to eliminate data-fee waste and protect the public tape from rent-seeking behaviors, the Commission must implement a Venue Trading Volume Threshold for Protected Quotes alternative (e.g., a rolling 1% ADV benchmark). This surgical model strips protection from illiquid platforms while anchoring a hyper-liquid, protected core tape that market makers can safely hedge against. Additionally, instead of implementing complex compliance requirements that benefit ONLY the lawyers and big consulting firms while exacerbating the gap between the “Haves” and “Have-Nots,” the Commission should adopt a Copyright Licensing Mechanism. By treating market data rebate incentives as standardized copyright royalties – drawing direct policy lessons from the music industry’s 4-part test objective rate-setting models – the clearinghouse can parse encrypted metadata tags to generate a robust cash cushion to absorb defaults, enhance capital velocity, and permanently lower the transaction cost barrier in the US. FINRA can, and should, warn and remind the Commission of how the SEC’s attempt to completely rescind OPR is fundamentally faulted, but cannot legally or logically demand that broker-dealers expend private capital to absorb and correct the fallout of that structural policy misstep. Download our full 45-page comment letter to FINRA at: https://www.databoiler.com/index_htm_files/DataBoiler FINRA BestEx 20260925.pdf

The firms disagree over whether Rule 611 should be scrapped or modified to preserve price protection.

SIFMA submitted comments to the SEC on its proposal to rescind Rule 611 and related Rule 610(e) provisions, highlighting potential market structure impacts.

Brokerage industry group's concerns include best execution, the NBBO, and market data.

Hyperliquid Policy Center and Douro Labs backed repealing SEC Rule 611 while seeking clearer best execution rules for onchain markets.

SIFMA and SIFMA’s Asset Management Group (SIFMA AMG) today submitted comments to the Securities and Exchange Commission (SEC) on its proposal to rescind Rule 611, the trade-through rule under Regulation NMS, along with the related prohibition on locked and crossed quotations under Rule 610(e). While SIFMA supports the SEC’s efforts to reduce regulatory-driven complexity and venue proliferation, it noted that eliminating Rules 611 and 610(e) without addressing downstream effects across the broader market structure framework could raise new questions for investors and broker-dealers alike. “SIFMA appreciates the Commission’s reassessment of Regulation NMS and its focus on reducing unnecessary complexity, venue proliferation, and forced connectivity,” said Katie Kolchin, CFA, managing director and head of equity and options market structure at SIFMA. “SIFMA’s recommendations aim to ensure that rescission of Rules 611 and 610(e) delivers those benefits—by reconciling the rules and plans that continue to depend on protected, automated, and manual quotations and the NBBO, by establishing a workable best execution framework in coordination with FINRA before effectiveness, and by describing how the resulting market structure, including for tokenized securities, is expected to operate.” As such, SIFMA’s comment letter focuses on the downstream considerations it believes are most important to helping the SEC reach its stated goals. SIFMA’s specific recommendations include, among others: Best Execution: While best execution is a FINRA rule, SIFMA believes the SEC and FINRA should work together to develop and publish a post-rescission best execution framework, affording market participants the opportunity to evaluate that framework well before Rule 611 rescission takes effect. That guidance should confirm that a broker-dealer may reasonably decline to connect to, or disconnect from, a venue – including national securities exchanges – for legitimate reasons, that doing so is not presumptively inconsistent with best execution, and that best execution remains a principles-based, facts-and-circumstances obligation. The National Best Bid and Offer (NBBO): While rescinding Rule 611 leaves the NBBO in place as the reference benchmark, the SEC should address the growing divergence between the market-wide NBBO and the prices a given broker-dealer can actually access, along with the many rules, SRO rules, and NMS plans that reference the NBBO. To maintain the quality and informational values of the NBBO, the SEC should establish a minimum volume threshold a venue must meet for its quotations to count toward the NBBO, a clear and uniform standard requiring that a quotation be immediately accessible to be included, and a requirement limiting quote-based market data revenue to quotations meeting those standards. Together, these would narrow the NBBO to meaningful quotations, reduce the number of displayed prices firms must evaluate, and cut the incentive to launch venues whose quotes aren’t practically reachable. Finally, while the SEC isn’t proposing to change Rule 603(c), the Vendor Display Rule, that the proposal creates problems if broker-dealers must display quotations to customers that the firm knows aren’t actually accessible. The SEC should reconcile Rule 603(c) with optional connectivity, clarify display obligations for firms that have disconnected from a venue, and support investor-facing disclosures, including mobile-friendly ones, which explain inaccessible, locked, or crossed quotations, ideally through a joint SEC/FINRA investor education campaign rather than leaving that burden to broker-dealers alone. Market Data: The SEC should consider whether additional quoting, accessibility, or execution standards should apply to any displayed quotation that helps set the NBBO, whether displayed on an exchange or through the Alternative Display Facility. The SEC should also re-examine the SIP revenue allocation methodology overall to not reward displayed quotations that contribute little meaningful liquidity and the revenue allocation formula that splits consolidated market data revenue evenly between quoting and trading activity, including whether executed volume should be weighted more heavily than quoting. Finally, broker-dealers will likely still need to consume consolidated market data from every venue for best execution and execution-quality reporting, even after disconnecting from that venue for trading. SIFMA wants the SEC to confirm this, since it means the proposal likely won’t reduce market data costs or complexity as intended. Locked and Crossed Markets: Current data doesn’t reliably predict how locked and crossed markets will behave after rescission, since order types that slide, hide, reprice, or post-only currently suppress locking/crossing orders, and access fees and rebates preserve spreads that might otherwise unwind through arbitrage. The SEC should publish uniform reporting and display conventions, transition disclosures, and exam expectations before Rule 610(e) rescission takes effect, clarify whether an exchange can lock or cross its own quotes, and include investor education on locked/crossed markets. Tokenized Securities: SIFMA has requested clarity on how U.S. equity market structure would function for tokenized NMS stocks and on-chain trading venues under the proposal, including whether a tokenized version of a stock is fungible with its street-name equivalent given differences in clearance and settlement. The full letter is available at the following link: https://www.sifma.org/advocacy/letters/the-trade-through-rule-and-locked-and-crossed-markets-provisions-of-regulation-nms