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Regulation NMS

The SEC framework linking US equity venues, best known for the order protection rule against trading through a better displayed price, plus access fee caps and market data rules.

Reg NMS made the US equity market a network of competing venues rather than one floor. Its order protection rule says a venue may not execute at a worse price than another venue's protected top-of-book quote, which forces routing and creates the national best bid and offer that your screen shows.

Supporting pieces matter just as much: a cap on access fees charged to take liquidity, which underpins the maker-taker rebate model, a ban on locked and crossed markets, and rules for how consolidated market data is produced and sold.

Its side effects are the market structure debates traders live with. Fragmentation across dozens of venues, the value of speed in reaching protected quotes, the growth of dark-pool trading, and the economics that make payment-for-order-flow viable all trace back here.

Related: best-execution, rule-605-report, payment-for-order-flow, dark-pool, regulation-ats

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