The term Order Protection Rule identifies market condition which ensures traders receive an execution price comparable for the best that’s given on most of trades that trade at the security. The Order Protection Rule is a supply of Regulation National Market System.
Also called Rule 611, the Order Protection Rule takes markets to generate and impose procedures that forbid “trade-through” trades, which is trades which implement at a high price that’s maybe not the ideal price displayed by automated trading centres. A supply of Regulation National Market System (Regulation NMS), Rule 611 intends to incorporate increased transparency and liquidity on the marketplace.
The Order Protection Rule relates to all NMS stocks, that may incorporate over-the-count (OTC) securities along with people traded on markets that are larger. The principle requires that the exchange not just to create procedures to make certain traders obtain the very best price on the securities, but additionally regulations.
Unfortunately, Rule 611 will not expel all trade-throughs. There are quite a few exceptions for the guideline. This usually means the exchange has to start looking for patterns of misuse versus those trades which be eligible for the exclusion.