Trade-through prohibitions is a policy that I have followed closely for several years—and one that I believe very clearly demands a course correction. Thread 🧵
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The stated purpose of the Trade-through Rule was “to increase displayed depth and liquidity in the NMS and thereby reduce transaction costs for a wide spectrum of investors, particularly institutional investors that must trade in larger sizes.”
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In practice, however, the rule restricted the price at which investors could trade by mandating execution at or within the National Best Bid and Offer (NBBO). This led the industry to treat price as the only factor when considering “Best Execution.”

Sep 18, 2025 · 8:14 PM UTC

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If left to their own judgment, participants could favor one exchange over another due to speed, the likelihood of execution, or the attributes of various order types.
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I suspect the exchanges would have continued to innovate along many of these dimensions. Instead, the Trade-through Rule reduced every consideration to a single characteristic: price. My full remarks at today’s roundtable on trade-through prohibitions: sec.gov/newsroom/speeches-st…
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