SEC Stays Some Regulation NMS Amendments

The Securities and Exchange Commission (SEC) has granted a partial stay of the amendments to Rules 610 and 612 of Regulation NMS.

The SEC’s December 12 order came in response to a motion filed by Nasdaq and Cboe, among others. That motion sought to stay the effect of the amendments, pending judicial review of the final rule amendments to Regulation NMS as a result of petitions filed in September and October 30.

The amendments involve changes to minimum pricing increments, access fees, and transparency of better-priced orders. The stay affects the amendments to Rules 600(b)(89)(i)(F), 610(c), and 612, which include reducing access fee caps and minimum pricing increments for certain NMS stocks.

The SEC determined a stay is prudent to avoid market disruption and regulatory uncertainty during the ongoing legal challenge.

However, the SEC did not stay the amendments to Rule 610(d), which requires that all exchange fees charged, and rebates paid, for executing an order of NMS stock be determinable at the time of execution. The SEC found no substantive challenge to these amendments and emphasized the benefits of increased transparency and clarity for investors.

The challenges to the Regulation NMS final rules are the latest challenge to the SEC’s rulemaking. While challengers have enjoyed success in courts within the Fifth Circuit, these cases were filed in the D.C. Circuit. It is unclear whether the judges in that circuit will be as amenable to this challenge.

That said, only time will tell whether the SEC continues to defend this rulemaking once the SEC’s leadership turns over early next year.