No, It's Not Rule 610(e) That Bans Locked and Crossed Markets — That's Rule 610(d)
“Rule 610(e) prohibits market participants from locking or crossing displayed quotations across trading venues”
The argument in brief
The claim says Rule 610(e) of SEC Regulation NMS prohibits market participants from locking or crossing displayed quotations across trading venues. This is partially false. The prohibition is real, but it lives in Rule 610(d), not 610(e). Rule 610(e) covers something else entirely — unfair access to quotations.
Why it spread
Regulation NMS is a long, technical document, and most people encounter it through summaries, training materials, or secondhand commentary rather than the original text. When one source gets a subsection letter wrong, that error gets copied and repeated across the industry. Without easy access to the primary source, there is no natural correction mechanism.
The claim gets the law half right. Regulation NMS does contain a rule prohibiting locked and crossed markets, and it does sit within Rule 610. But the subsection cited — 610(e) — is the wrong one. The actual prohibition is in Rule 610(d), and the difference matters.
According to the SEC's own final rule release (Release No. 34-51808), Rule 610(d) requires trading centers to establish, maintain, and enforce written policies and procedures designed to prevent the display of quotations that lock or cross any protected quotation in an NMS stock. That is the operative provision. It is specific, it targets trading centers directly, and it has defined exceptions.
So what does Rule 610(e) actually do? The CFA Institute's overview of Regulation NMS and the SEC's own text are clear: Rule 610(e) prohibits trading centers from imposing unfairly discriminatory terms that would prevent other market participants from accessing their quotations. It is about fair access, not locked or crossed markets. These are related but distinct obligations.
FINRA's guidance reinforces this. FINRA Rule 5220 and related regulatory notices address locked and crossed markets in a way that is consistent with Reg NMS Rule 610(d) — not 610(e) — as the governing subsection. Secondary sources that cite 610(e) for this prohibition are simply citing the wrong letter.
This kind of error spreads because regulatory documents are dense, subsection labels are easy to transpose, and most readers never go back to the original text. If you see a rule cited in a training deck, a compliance memo, or a financial news article, it is worth checking the actual source document before relying on it. A one-letter difference in a citation can point you to an entirely different legal obligation.
Sources
- SEC Regulation NMS – Rule 610
Rule 610(d) of Regulation NMS, not Rule 610(e), is the provision that prohibits market participants from engaging in a pattern or practice of displaying quotations that lock or cross protected quotations. Rule 610(e) addresses a different matter related to the obligations of trading centers.
- SEC Regulation NMS Final Rule Release (Release No. 34-51808)
Rule 610(d) specifically states that a trading center shall establish, maintain, and enforce written policies and procedures reasonably designed to prevent the display of quotations that lock or cross any protected quotation in an NMS stock, with limited exceptions.
- FINRA Regulatory Notice on Locked and Crossed Markets
FINRA Rule 5220 and related guidance reinforce the prohibition on locking or crossing markets, consistent with Reg NMS Rule 610(d), not 610(e), as the operative subsection governing this prohibition.
- CFA Institute – Regulation NMS Overview
Summaries of Regulation NMS consistently attribute the locked/crossed market prohibition to Rule 610(d), which targets trading centers' policies and procedures, while Rule 610(e) pertains to the prohibition on unfairly discriminatory terms for access to quotations.