Citadel Securities urges SEC to reconsider stock-trading rule proposal

Citadel Securities, one of the largest market makers in the world, is pushing back hard against the SEC’s plan to eliminate a foundational stock-trading rule that has governed US equity markets for more than two decades.

In a comment letter submitted on August 17, 2026, the firm founded by Ken Griffin argued that the SEC’s proposal to rescind Rule 611 of Regulation NMS, the so-called trade-through rule, could reduce liquidity, weaken price discovery, and leave retail investors worse off. The firm didn’t mince words, calling the agency’s economic justification for the change “fatally flawed.”

What Rule 611 actually does

Rule 611 is part of Regulation NMS, a package of rules the SEC adopted in 2005 to modernize and bring greater transparency to US equity markets. The rule’s core function is deceptively simple: it prevents brokers from executing a stock trade at a price worse than the best available price displayed on another exchange.

On June 11, 2026, the SEC, under Chairman Paul Atkins, proposed eliminating Rule 611 along with a related provision, Rule 610(e). The agency’s argument centered on the idea that these protections have become unnecessary in today’s faster, more competitive trading environment and that removing them would cut costs for market participants.

The projected savings? Roughly $250,000 per trading day.

Citadel’s case against the change

Citadel Securities seized on that number as evidence that the SEC hasn’t properly weighed the costs and benefits. The firm’s letter argued that whatever modest savings might come from eliminating compliance costs are dwarfed by the potential damage to market quality.

The company’s central concern is what happens when brokers are no longer required to route orders to the exchange showing the best price. Without that obligation, brokers could increasingly choose to fill orders internally, a practice known as internalization. When orders get filled inside a broker’s own system rather than on a public exchange, less trading activity hits the lit market, meaning the prices displayed on exchanges become less reliable as signals of what a stock is actually worth.

Citadel’s letter also warned that the proposal could divert order flow away from public exchanges entirely. If brokers face no penalty for ignoring better prices posted elsewhere, the incentive to route orders to exchanges diminishes, potentially concentrating more trading in private venues where transparency is limited.

A counterproposal instead of a full repeal

Rather than simply opposing the SEC’s plan, Citadel Securities offered an alternative. The firm suggested that instead of eliminating trade-through protections altogether, the SEC could implement a minimum volume threshold that exchanges would need to meet in order to receive “protected quote” status.

A volume threshold would address friction caused by small, low-volume exchanges that technically display competitive prices but may not have enough liquidity to actually fill orders at those prices. Smaller venues that don’t attract enough trading activity would lose their protected status, but the core principle — that brokers shouldn’t be able to ignore better prices available on major exchanges — would remain intact.

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