Statement at the Roundtable on Rule 611 of Regulation NMS

Thank you to the Division of Trading and Markets for organizing this Roundtable on equity market structure and, more specifically, Rule 611 of Regulation NMS. I have been at the SEC for nearly twenty years, and one of my observations is that people often will be more open with their thoughts when meeting outside of Washington, D.C. However, these events take more effort, and I appreciate the contributions of the University of Austin for making this Roundtable possible in Texas.

Regulation NMS may have been well-intentioned, but its implementation has coincided with shrinking displayed size, a significant increase in the number of execution venues, and complex routing behavior that is often difficult to explain to investors. Thus, I commend Chairman Atkins for initiating this review of Rule 611 and inviting market participants to help the SEC evaluate whether the Regulation NMS framework is truly serving investors and our markets. By revisiting the trade-through regime, we have an opportunity to move to a less costly, more resilient, and more transparent market structure-which would make our markets even stronger.

This is not an easy task. My predecessor, Commissioner Elad Roisman, likened our equity market structure rules to the threads of a sweater: pull on one, and you inevitably stress the others-sometimes in unexpected ways.[1] I hope that these Roundtable sessions, and the public comments submitted, help identify many of the other "threads" in Regulation NMS that interconnect with Rule 611, so that we can assess the consequences that might result from potential regulatory changes.

One discussion that I look forward to hearing today is on the topic of best execution. A broker-dealer's obligation to seek best execution of customer orders is one of the "cornerstones of market integrity." [2] As I noted when the Commission proposed new rules in this area two years ago, best execution is a concept that has been developed by court holdings and specific rules from self-regulatory organizations.[3] But to what extent does our current best execution regime presuppose or rely on entities' fulfillment of Rule 611? Are there other considerations that should be required if this rule is altered?

The Commission should have compelling evidence of need before adding layers on top of the best execution regime already imposed by FINRA.[4] Do panelists think that such a need would arise if Rule 611 were to change and, if so, why? Relatedly, are there further ways that the Commission could increase transparency so that investors, counterparties, and regulators could observe execution quality across venues and enhance private ordering in this area? In 2024, the Commission adopted rule changes to modernize the reports required by Rule 605 to reflect how trading occurs in microseconds across multiple venues.[5] In what other areas would transparency be needed for market participants to have the tools to assess execution quality on their own?

Once again, I appreciate the thoughtful approach taken by the Commission staff to consider the entire regulatory framework holistically. This undertaking presents an opportunity for a serious retrospective review of Regulation NMS and Rule 611. With the public's input, I hope that the Commission can tackle these hard problems with evidence-based proposals so that our market structure regulations can most effectively serve investors, intermediaries, and issuers.