SEC commissioners voted 5-0 today to amend the so-called "trade-through" rule requiring stock orders to be sent to the market with the best price available. The proposed new rules would not allow investors to trade through a fast market with automatic execution but would allow them to trade through a slow market that does not offer automatic execution. In addition, the proposal would allow investors to opt out of the trade-through rule on a trade-by-trade basis.
John Thain, chief executive officer of the New York Stock Exchange, told a small group of reporters today that the opt-out clause was not good public policy. "I don't think that's in the investing public's best interest," he said. "If you have comparable execution speed, you should in fact go get your customer the best price, wherever it is." He said recent changes proposed by the NYSE to increase automatic execution on the exchange floor would put the NYSE's speed on par with other trading venues.
The proposed SEC rules, which would also expand the trade-through regulation to other markets, including Nasdaq, have a 75-day comment period; after that time, commissioners will take a final vote on the measures.