US regulator proposes scrapping key equity market rules

The US Securities and Exchange Commission has proposed amendments to rescind Rules 611 and 610(e) of Regulation NMS, marking a significant shift in the regulatory framework governing US equity markets. The move comes after two decades of operation for Rule 611, with regulators signalling a desire to dismantle provisions they argue have stifled market evolution.

SEC Chairman Paul S. Atkins stated that the commission must review the "unintended consequences" of the existing rules, which he asserted have hindered rather than enhanced long-term market growth. The proposed amendments aim to simplify the market structure and reduce costs for market participants, allowing competition and innovation to drive the continuing evolution of equity markets.

Atkins emphasised that the commission intends to take a "careful, deliberative approach" to the review process. He noted that this methodology is designed to avoid repeating the same regulatory mistakes that led to the current assessment of the rules' impact on market efficiency and growth.

The proposal outlines a clear path for stakeholder engagement, with the public comment period remaining open for 60 days following the publication of the proposing release in the Federal Register. This window allows market participants and the broader public to submit feedback before the commission finalises its decision.

While the proposal seeks to deregulate specific aspects of market structure, the final outcome remains subject to the commission’s deliberation and the input received during the comment period. The SEC has not yet specified a timeline for implementation beyond the initial review phase, leaving the precise nature of any future regulatory changes undefined at this stage.