medium · Market Microstructure

Under Regulation NMS Rule 611 (the Trade-Through Rule), if Exchange A displays a protected offer of 500 shares at 15.50 and Exchange B executes a 1,000-share buy order at 15.55, which of the following statements correctly identifies the regulatory status of this event?

1. This is permitted, since Exchange B offered more depth (1,000 shares) than Exchange A's 500 shares at the top.
2. This is permitted under Rule 612 whenever the execution price increment is exactly one cent wide.
3. This is a violation of Rule 610's Access Rule, which governs discriminatory connectivity and quoting fees.
4. This is a violation because Exchange B executed at a price inferior to the best available protected quote.

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