This is a significant step towards the dismantling of Reg NMS, as it was originally adopted. Critics of the Reg NMS have long argued that the proliferation of exchanges was significantly driven by small exchanges gaming the manner in which the SEC rules allocated trading fees, and particularly by the fact that the rules rewarded quoting even when the quotes did not result in a trade. 

By reducing the reward to exchanges for providing quotes that do not result in a trade, combined…

The various exchanges seem to be preparing their own rules sets in

In this proposal, the CFTC seems to be conceding some fairly significant ground, although how much ground is not at all clear. There are a lot of contracts that are wholly unrelated to sports whose status is quite unclear under the proposal. 

Besides the question of what is in the public interest, there are two other questions that are worthy of consideration, one retrospective, one prospective.

The retrospective question is what did Congress intend by "gaming" when it…

The question is not whether the trade-through rule should be rescinded, but how fast and what, if anything, replaces it; i.e., does the SEC forgo new rulemaking and simply point to a broker-dealer's obligation to obtain best execution for its clients, supplemented by the existing requirements for broker-dealers to provide disclosure pursuant to NMS on order execution and on order routing.

If Chair Atkins is correct as to the (negative) consequences of the trade-through rule,…