The Thirty Years War

8 Pages Posted: 10 Aug 2005

See all articles by Craig Pirrong

Craig Pirrong

University of Houston - Department of Finance


The centerpiece of the Securities and Exchange Commission's new "Regulation NMS" is a "trade-through rule" (formally titled the "Order Protection Rule") that requires market centers to route orders to any market center currently showing a better price on an automated trading system or else match that better price. In addition, the SEC approved an "Access Rule" intended to facilitate the operation of the trade-through rule. There are some benefits to the new rule. Unfortunately, in the face of an intense lobbying effort led by the New York Stock Exchange, the commission adopted a version of the rule that will likely have a far smaller favorable impact on competition in securities markets than would have resulted if the SEC had approved another alternative, the "depth of book" proposal, that it had advanced last December. The SEC's caution in 2005 continues its decades-old tradition of reluctance to challenge the NYSE's dominance.

Keywords: Securities and Exchange Commission, Regulation NMS, trade-through rule, Order Protection Rule, Access Rule, New York Stock Exchange, SEC, NYSE

JEL Classification: D4, G1, G10, G18, H1

Suggested Citation

Pirrong, Craig, The Thirty Years War. Regulation, Forthcoming. Available at SSRN:

Craig Pirrong (Contact Author)

University of Houston - Department of Finance ( email )

Houston, TX 77204
United States

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