We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is an Order Protection Rule?

Mary McMahon
By
Updated: May 17, 2024
Views: 6,823
Share

An order protection rule ensures that trades are executed at the best available price in a national market. Several nations enacted various versions of such rules in order to address concerns about transparency and competition in national exchanges. Prior to the order protection rule, investors in one location might get a worse price than those in another location, despite the fact that both prices were publicly available. Canada and the United States are two examples of countries with such regulations.

This is also called a trade through rule, or Rule 611 in the United States in reference to the relevant section of the Regulation National Market System put in place by the Securities and Exchange Commission (SEC). Under this rule, when investors place an order, it must be matched at the best publicly available and automatically accessible price. Investors receive access to the most favorable pricing, and consequently, securities trade consistently throughout the market, which can be an important consideration for traders.

There are some exemptions to an order protection rule, which may depend on policies within individual nations. Exchanges are required to maintain a rulebook with all their standards and practices, including discussions about how they implement regulations. This can include disclosures about exceptions to the order protection rule so consumers are aware of when it is not in effect. Generally, securities traded on public markets are subject to this regulation because public quotes on their prices are available.

Before implementing an order protection rule, a regulator will typically conduct a careful market analysis. This can identify specific issues that may be involved in a particular market so regulators can adequately address them in the framing of the regulation. They may also compare and contrast rules used in other nations to determine if it is possible to adopt some of the language and underlying concepts. Since many investors operate on an international level, consistency can be very important for people who may be trading on several exchanges.

If such a rule is in place, investors can find it in the section of the law pertaining to investment and securities trading. Attorneys may have more information on interpretations of the rule and can provide information about how it is applied for investors who have trouble understanding it as written. Legal discussions about the implications of an order protection rule can also be found in trade journals that provide information for investors and related professionals.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Editors' Picks

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
Share
https://www.wisegeek.net/what-is-an-order-protection-rule.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.