U.S. Financial Services Committee examines equity market structure and potential changes to Reg NMS Rule 611

The U.S. Financial Services Committee's Subcommittee on Capital Markets held a hearing on whether U.S. equity market rules remain fit for purpose, with Regulation National Market System and Rule 611 at the center of the discussion. Lawmakers and witnesses examined whether the Order Protection Rule should be rescinded or substantially revised to reduce fragmentation and compliance burdens while maintaining liquidity, retail access, and capital formation. Discussion focused on what framework could replace or supplement Rule 611. Committee leaders asked whether a stronger, data-driven FINRA best execution standard, assessing factors such as execution speed and fill probability rather than only the top-of-book price, could deliver better outcomes for retail investors. Witnesses said expanded Rule 605 execution quality reporting for brokers could expose higher trading costs, while Nasdaq argued that weakening incentives to display liquidity on lit exchanges could erode the national best bid and offer benchmark. Lawmakers also linked the debate to competition, citing a nearly 30% fall in U.S. broker-dealers between 2010 and 2024 despite almost USD 2 trillion in industry asset growth, and Robinhood warned that limits on payment for order flow could push brokerage costs back to customers and threaten zero-commission trading.