In one of the most sweeping changes to stock trading rules in years, a divided Securities and Exchange Commission on Wednesday approved a regulation requiring brokers to accept the best quoted price for any transaction, no matter which market it comes from.
Proponents hailed the move as a protection for individual investors. Some of Wall Street's trading houses said the rule would hamper competition and limit investors' options, however.
By a 3-2 vote, with the Commission's two Democrats siding with Republican Chairman William Donaldson, the agency extended the reach of a regulation requiring brokers to obtain the best possible price for customer orders even if it means going to another market and takes longer. Stock traders could no longer ignore a better price in favor of sending an order to a preferred market, which might allow for faster execution.
The SEC had tentatively approved the plan, called Regulation National Market System, or Reg NMS, in December. The SEC chairman has since defended it before Republican critics in Congress.