5.10.1.5. Order Protection Rule
The Order Protection Rule requires trading centers to obtain the best price available through automated quotations. This rule was designed to prevent trade-throughs, which are trades that trade “through” the best available protected quote in favor of a less competitive quote. A protected quote is one that can be automatically and immediately accessed. This rule applies to NMS stocks (NYSE, AMEX, and Nasdaq) but not to OTC stocks. It also applies to all exchanges and OTC market makers and firms that execute trades internally. Rule 611 requires that trading centers establish written policies that prevent trade-throughs.
Three important exceptions to this rule are:
1. Intermarket sweep orders (ISOs). ISOs are limit orders directed to a particular market. In addition to this limit order, however, multiple limit orders are sent out simultaneously to other markets to be executed at the limit price or better. Thus, the ISO exemption allows a specific mar