SEC adopts amendments to Regulation National Market System

The Securities and Exchange Commission (SEC) adopted amendments to certain rules under Regulation National Market System, but commonly known as Regulation NMS.

Regulation NMS was established in 2005 to adapt to changing technology, improve market efficiency and fairness, and modernize price executions.

The new amendments are designed to reduce transaction costs and help ensure that orders placed in the national market system reflect the best prices available for all investors.

Specifically, they adopt an additional minimum pricing increment, or “tick size,” for the quoting of certain NMS stocks. They establish a new, additional $0.005 minimum pricing increment for quotations and orders in NMS stocks that are priced at, or greater than, $1.00 per share. The tick size for all NMS stocks will be based on the Time Weighted Average Quoted Spread for the relevant NMS stock during a specified three-month Evaluation Period and thereafter assigned for a six-month period.

“In 1975, Congress tasked the Securities and Exchange Commission with responsibility to facilitate the establishment of the national market system and enhance competition in the securities markets, including the equity markets,” SEC Chair Gary Gensler said. “A lot has changed – in technology and business models – since we last took a comprehensive review of the national market system rules in 2005. Thus, it is incumbent upon us to update our national market system rules. The reforms we adopted today will help promote greater transparency, competition, fairness, and efficiency in our $55 trillion equity markets. That goes to the heart of the SEC’s mission. The reforms are pro-investors. They are pro-capital formation.”

Further, the amendments address distortions associated with access fees and rebates under the existing access fee caps, address potential conflicts of interest, and increase the transparency of exchange fees, rebates, and other forms of remuneration.

Specifically, the amendments reduce the access fee caps for protected quotations in NMS stocks that are priced $1.00 or more to $0.001 per share. For protected quotations in NMS stocks priced less than $1.00 per share, the access fee cap will be 0.1 percent of the quotation price per share. In addition, Rule 610 will now require exchanges to make the amounts of all fees, rebates, and other forms of remuneration determinable at the time of execution.

Also, to expedite the availability of information about the best prices for smaller-sized orders, the SEC accelerated the implementation of previously adopted definitions related to round lots and odd-lot information.

The amendments will become effective 60 days after the publication of the adopting release in the Federal Register. The compliance date will be the first business day of November 2025, except for the odd-lot information, which has a compliance date of the first business day of May 2026.

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