Trade Through

A stock market order that is not executed at the best possible price according to quoted prices at other exchanges. Regulations to protect against trade-throughs were first passed in the 1970s and were later upgraded via Rule 611 of Regulation NMS, which passed in 2007.

Rule 611, otherwise known as the Order Protection Rule, aims to ensure that both institutional and retail investors get the best possible price for a given trade by comparing quotes on multiple exchanges. If a better price is quoted elsewhere, the trade must be routed there for execution, and not "traded through" at its current exchange.

Regulation NMS extends the old trade-through provisions past the NYSE and now covers all Nasdaq and AMEX-listed stocks, as well as many smaller bourses. The current Order Protection Rule also protects share blocks of less than 100 shares, which in the past could be traded through by brokerages without penalty.

Manual quotes are not considered protected by Reg NMS; only electronically delivered price quotes, the best of which (also called the top-of-book orders) must now be posted across any other exchanges under the NMS umbrella.