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Regulation National Market System (or Reg NMS) is a 2005 US financial regulation promulgated and described by the Securities and Exchange Commission (SEC) as "a series of initiatives designed to modernize and strengthen the National Market System for equity securities".
In 1972, before the Securities and Exchange Commission (SEC) began its pursuit of a national market system, the market for securities was quite fragmented. The same stock sometimes traded at different prices at different trading venues, and the NYSE ticker tape did not report transactions of NYSE-listed stocks that took place on regional exchanges or on other over-the-counter securities ...
Regulation NMS (Reg NMS), which applies to U.S. stock exchanges, supports two types of IOC orders, one of which is Reg NMS compliant and will not be routed during an exchange sweep, and one that can be routed to other exchanges. [5] [6] [7] Optimal order routing is a difficult problem that cannot be addressed with the usual perfect market paradigm.
The unfortunate reality of the U.S. stock market is it is extremely complicated. There are exchanges. Broker-dealers. Dark pools. High-frequency traders. Alternative trading systems. And all of ...
These work against the order-protection rule under regulation NMS. For example, if a trader is trying to buy 1000 shares of X, and there are 100 shares of X being offered at $1 at one exchange and 2000 at $1.10 at another exchange, the order protection rule would let you buy ONLY those 100 shares at $1, after which you would need to send in ...
The SIPs only publish quotes protected under Regulation NMS, meaning only round lots of 100 shares or more are included. From around 2015, odd lots of fewer than 100 shares began to account for a growing proportion of all exchange trades because of retail interest, reaching a record of nearly 50% of all trading volume by 2019. [ 20 ]
ECNs enjoyed a resurgence after the adoption of SEC Regulation NMS, which required "trade through" protection of orders in the market, regardless of where those orders are placed. In the past, many ECNs were "closed book"—i.e., allowing participants to interact only with other participants in that network.
The AI trade is still in full swing. The AI boom that unfolded in 2023 spilled over into 2024 and has shown little sign of slowing down.