Regulation NMS

Definition

Regulation NMS in plain English

Imagine a country where the same stock trades on a dozen different exchanges at once — Reg NMS is the giant rulebook the SEC wrote in 2005 to knit them into one fair "national market" instead of a dozen disconnected shops. Its most famous rule, the Order Protection Rule, bans a "trade-through": no exchange may fill your buy order at $10.02 if another exchange is openly offering the same stock for $10.01 — you're entitled to the best visible price. Two sister rules keep it fair: the Access Rule guarantees every exchange can see and reach every other's prices, and the Sub-Penny Rule forbids quoting in fractions of a cent (like $10.0001) so nobody can cut the line by an economically meaningless amount. The whole point is that a small investor gets the same best price a giant bank would.

Learn these first

• Sub-Penny Rule (Rule 612)

Practice Regulation NMS

A regulatory rule prevents an exchange from executing a… This is a direct application of which Regulation NMS rule?

Related Market Microstructure terms

• Access Rule (Rule 610)
• Call Auction
• Continuous Auction
• Iceberg Order
• Limit Order
• Limit Order Book (LOB)
• Maker-Taker Fee Model
• Order Protection Rule (Rule 611)
• Order-Driven Market
• Price Priority