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OPR and ‘The Doorman Fallacy’

The Order Protection Rule (OPR), a core element of Reg NMS, obliges U.S. exchanges to route orders to the venue displaying the national best bid or offer (NBBO). Since its adoption, the rule has spawned 17 protected exchanges, many with sub‑1% market share, driving six‑figure connectivity costs for broker‑dealers. Critics argue that modern routing technology and best‑execution obligations make OPR redundant, while supporters see it as a vital backstop for price transparency and market quality. The ongoing debate centers on whether the rule’s benefits outweigh its operational expenses and whether a principles‑based framework could replace it.