What is the order protection rule?
The Rule of Protection of the Order ensures that trades are carried out at the best available price on the national market. Several nations have accepted different versions of such rules to deal with concern about transparency and competition in national stock exchanges. Before the order protection rule, investors could get a worse price in one place than prices in another place, even though both prices were publicly available. Canada and the United States are two examples of countries with these regulations. According to this rule, when investors place the order, they must be compared for the best publicly available and automatically accessible price. Investors receive access to the most favorable prices and subsequently securities trade consistently throughout the market that can be an important aspect. Exchanges are required to maintain the rules with all their standards and procedures, including discussions on how they are carried out. This may include publishing exemptions for order protection rule so that consumers are aware of itHo, when it is not in force. In general, securities traded in public markets are subject to this regulation because public quotes about their prices are available.
Before introducing the order protection rule, the regulator usually performs a careful market analysis. This can identify specific problems that may participate in a particular market so that regulators can solve adequately in framing the regulation. They can also compare and contrast rules used in other countries to determine some of the languages and basic concepts. Because many investors operate international, consistency can be very important for people who can trade on several exchanges.
If such a rule is introduced, investors can find it in a part of the law on investment and trading in securities. Attorneys can have more information about interpretations of rules andThey can provide information on how it relates to investors who have difficulty understand how it is written. Legal discussions on the consequences of the order protection rule can also be found in business journals that provide information to investors and related experts.