The SEC extended temporary exemptive relief for the SEC’s 2024 amendments to Regulation NMS, which was previously set to expire in November 2026.
The 2024 amendments implemented several changes whose compliance deadlines are now being pushed back. These include a new $0.005 minimum pricing increment for certain NMS stocks priced at or above $1.00, reduced access-fee caps for protected quotations, and certain round-lot and odd-lot information requirements.
Complex implementation
The SEC said the additional year should give affected broker-dealers, exchanges and other market participants enough time to make the required systems changes and allow for a more orderly transition to the amended rules.
The agency pointed to industry comments warning that implementation of the amended tick-size and access-fee rules would require changes to the entire market ecosystem.
Implementation is complex – trading venues would need to make sure their systems can recognize which securities are subject to the smaller tick size, quote and route orders using the correct increment, and calculate exchange fees and rebates under the revised caps, among other obligations.
Compliance teams would also need to test whether surveillance, order-routing reviews, best-execution procedures, and fee controls still operate correctly under the amended rules.
The SEC’s order also noted concerns that the Reg NMS amendments would have to be implemented alongside other market structure initiatives in 2026, including 23/5 trading and Rule 605, adding to the complexity.
Further Reg NMS scrutiny
Last week, the agency proposed rescinding Rule 611 and Rule 610(e) of Reg NMS. Rule 611 generally prevents a trading center from executing an order at a price worse than a protected quote displayed on another venue. Rule 610(e) restricts quotations that lock or cross the market, for example, quotes where the best bid equals or exceeds the best offer.
Notably, those proposed changes would remove the concept of a “protected quotation” from the SEC’s rulebook, including references embedded in the 2024 amendments’ changes to access-fee caps.
If the SEC ultimately removes that concept, it may need to make parallel changes to the access fee framework or clarify how the revised caps should operate without Rule 611.