In this paper, the FIA Principal Traders Group advocates for targeted reforms to Regulation NMS, addressing Reg NMS’ impact on costs, best execution, venue proliferation and the generation of complex order types. As feared at the time of adoption, these provisions have led to unimaginable increases in cost and complexity as a result of venue and order type proliferation as well as a narrow interpretation of best execution.
The current rules, driven by an outdated regulatory framework, impose exorbitant and unnecessary costs on market participants, with major firms spending millions annually just on market data and connectivity fees to all US exchanges. These expenditures, which are a direct result of our current market structure, do not meaningfully contribute to better outcomes for investors.
