Three Rewires Hit U.S. Equity Markets at Once

Three Rewires, One Window

U.S. equity market structure is being rebuilt while the pipes are full. Three developments — each significant on its own — are converging within a six-week window in mid-2026, and the interaction between them is the part nobody has priced yet.

First, the SEC proposed on June 11 to rescind the two most foundational rules in Regulation NMS: the Order Protection Rule (Rule 611, the trade-through prohibition) and the locked-and-crossed-markets prohibition (Rule 610(e)). Second, the major exchanges filed a joint plan to establish overnight price-band protections ahead of 24-hour trading. Third, SpaceX — the largest IPO in U.S. history — begins releasing its staggered lockup tranches in early August, unlocking roughly $123 billion in shares at recent prices into a stock already trading below its IPO price.

Layered on top: an IPO window that is open but sagging, a biotech secondary-offering flood that topped half a billion dollars in a single week, and a steady drumbeat of corporate buyback authorizations. The question is not whether any single one of these matters — it is what happens when they hit simultaneously.

The SEC Unplugs the Order Protection Rule

On June 11, 2026, the SEC proposed rescinding Rule 611 and Rule 610(e) of Regulation NMS, the rules that have governed intermarket price protection since 2005.^[1] Chairman Paul Atkins framed the move as correcting “unintended consequences that have hindered — rather than enhanced — the long-term growth of our markets,” arguing that electronic trading, automated routing, and widely available market data have made the rule’s protections redundant.^[1]

Rule 611 prohibits trade-throughs — a trading center cannot execute an order at a price inferior to the best displayed bid or offer on another exchange. In practice, it hardwires the National Best Bid and Offer (NBBO) into every transaction. Rule 610(e) prohibits locked and crossed quotations, requiring venues to manage their displayed quotes relative to each other in real time.^[2]

If the rescission is adopted, the governing framework shifts to FINRA Rule 5310, the broker-level best execution standard, which requires “reasonable diligence” to obtain the most favorable price under prevailing conditions rather than a hard prohibition on trading through displayed quotes.^[2]

The market context has changed materially since 2005. Eight national securities exchanges traded NMS stocks in 2005; today there are 17, with three more approved. Rule 611 effectively guaranteed that any new exchange displaying protected quotes would receive order flow and connectivity revenue, incentivizing exchange proliferation and fragmenting liquidity. Off-exchange venues — alternative trading systems, dark pools, single-dealer platforms, and wholesalers — have regularly exceeded 50% of overall volume since the end of 2024.^[2]

The proposal also fits the SEC’s broader “Project Crypto” agenda. Rule 611 is structurally incompatible with automated market makers (AMMs) used in DeFi protocols, which execute trades against liquidity pools at algorithmically determined prices and cannot route intermarket sweep orders or ingest consolidated market data with latency guarantees. The SEC’s proposal explicitly highlights innovations like “intents-based trading, automated market makers, decentralized price oracles, or atomic cross-domain settlement” as things that Rule 611 has blocked.^[2]

The comment period remains open for 60 days following publication in the Federal Register, which occurred on June 17, 2026.^[3] The proposal also delays implementation of the 2024 market-structure reforms — the tick-size changes and transparency-of-better-priced-orders rules adopted under the prior Commission.^[4]

What would have to be true for the optimistic case? That competitive market forces and FINRA’s best-execution standard are sufficient to prevent price degradation without the hard NBBO floor, and that reduced connectivity costs and fewer artificial incentives for exchange creation consolidate rather than fragment liquidity further. What would have to be true for the pessimistic case? That without the trade-through prohibition, retail order flow gets executed at inferior prices on venues that offer payment for order flow rather than best price, and that the fragmentation that Rule 611 was meant to prevent returns in a different form. The honest answer: the 60/40 split probably favors the SEC’s thesis that markets have evolved past the need for 2005-era hardwiring, but the 40% case is real — it is the case where best-execution enforcement proves insufficient to substitute for a structural prohibition.

Overnight Trading Gets Guardrails

On May 27, 2026, Nasdaq, NYSE, and CBOE — along with other exchange subsidiaries — filed a joint proposal with the SEC to establish temporary price-band protections for overnight trading, defined as running from 9:00 p.m. through 4:00 a.m. Eastern.^[5] Nasdaq has already received accelerated approval to extend its trading hours to 23 hours a day, five days a week.^[6]

The exchanges proposed a two-phase approach. Phase 1 adopts price-band controls modeled on those currently used by certain alternative trading systems (ATSs), using two reference prices — the closing price and a post-market execution price — to set the bands. Using two prices avoids creating bands that are too restrictive and could hamper price discovery based on after-close news.^[5]

Phase 2, expected by the end of 2027, would adopt more permanent requirements that “more closely resemble” the controls that apply during regular trading hours. Notably, the exchanges decided against automatic trading pauses during overnight sessions, though they retain discretionary authority to order halts. Any overnight halt would remain in effect for the rest of the session, since no restart process has been established.^[5]

The 4:00 a.m. cutoff is deliberate: it accommodates the practice of issuers releasing earnings and corporate disclosures in the pre-market hours, allowing “fundamental corporate information to be disseminated and absorbed by the market” without the constraints of overnight price bands based on the prior day.^[5]

The exchanges stress that overnight sessions present “unique challenges for market integrity, including reduced liquidity, increased information asymmetry due to overnight news flow and global developments, and a heightened potential for erroneous trades.”^[5] The guardrails are designed to limit the frequency and severity of “fat-finger” events and flash-crash episodes in a thinner liquidity environment.

The Largest Lockup Cliff in History

SpaceX went public on June 11, 2026, listing on Nasdaq under SPCX at $135 per share, pushing the company’s valuation past $2 trillion — the largest public offering in U.S. history.^[7] Less than 5% of total shares were released into the public float at launch.^[7]

Rather than the standard 180-day single lockup, SpaceX implemented a staggered release schedule. Tranches of roughly 7% unlock at days 70, 90, 105, 120, and 135 after the IPO. The first major wave — between 20% and 30% of total shares — lands approximately two trading days after the company reports Q2 earnings, meaning the stock will simultaneously digest financial results and absorb a massive supply increase.^[7] A second tranche of about 28% follows after Q3 earnings. By December 8, 2026, when the full 180-day period concludes, roughly 40% of all SpaceX shares will be freely tradable.^[7]

Elon Musk’s shares carry a 366-day lockup, meaning the largest potential selling overhang sits well in the future, around June 2027.^[7]

The supply-demand math is already uncomfortable. SpaceX shares have been trading in the $116 to $124 range as of mid-to-late July, below the $135 IPO price.^[8] The stock hit an all-time closing low of $123.99 on July 18, marking a sixth straight daily decline.^[8] It peaked at $225.64 on June 16 before sustained selling pressure.^[8] Roughly 911.5 million shares are set to be released — valued at approximately $123 billion at recent prices.^[7]

The staggered structure is a feature, not a bug. It is designed to prevent a single wave of selling from overwhelming the stock. But the first tranche lands right after Q2 earnings — the worst possible moment for a stock already below its IPO price, because any earnings disappointment compounds with the supply shock. The 70/30 probability here favors meaningful downside pressure through August, with the 30% case being that strong Q2 results and the phased structure absorb the supply without a break below recent lows.

The IPO Window: Open but Sagging

The IPO calendar for late July is thin — just three deals on deck — but the signal from recent pricings is mixed.

Csquare (CSQR), a carrier-neutral data center colocation operator with 64 facilities across the U.S. and U.K., priced 50 million shares at $21 on July 16, raising approximately $1.05 billion.^[9] That was below the company’s $23-$27 target range.^[9] The stock received a weak market reception, falling below its IPO price as it hit the market just as investor appetite for AI infrastructure appeared to be cooling.^[9]

Scribe Therapeutics (SCTX), an Eli Lilly-backed Phase 1 biotech developing CRISPR therapies for cardiovascular and metabolic diseases, plans to sell 7.15 million shares at $13 to $15 in its IPO, targeting approximately $100 million at the midpoint.^[10] The deal is expected to price on July 24, 2026, with Leerink Partners, Goldman Sachs, and Guggenheim Securities as lead underwriters.^[11] At the top of the range, Scribe could gross up to $123.3 million.^[10]

A SPAC — Southern Cross Acquisition I Corp. (NCOU) — rounds out the near-term calendar, with 10 million units at $10 targeting $100 million.^[11]

The read-through: the window is open for quality issuers, but pricing power has shifted to buyers. Csquare’s below-range pricing is the clearest signal that AI-infrastructure enthusiasm is no longer a blank check for new issuance at any price.

Biotech Secondaries Flood In

While the primary IPO window is narrow, the follow-on offering market for biotech is running hot. In a single week, at least five biotech and life-sciences companies priced or closed public offerings:

The aggregate exceeds half a billion dollars in gross proceeds in roughly one week, with Dyne Therapeutics’ $375 million upsized offering as the anchor. The structures tell a story: pre-funded warrants and milestone warrants are doing heavy lifting, suggesting that issuers are offering creative terms to clear the market rather than pricing plain-vanilla common at attractive levels. That is consistent with a funding environment where biotechs need capital but face price-sensitive buyers.

Buybacks: The Counterflow

On the other side of the supply-demand ledger, corporate buyback authorizations continue at a steady pace:

• Jabil (JBL): $1.5 billion share repurchase authorization announced July 15.^[13]
• Wise Group (WSE/WISE): Share buyback program commenced July 21, with Goldman Sachs International as broker, following a June 26 announcement.^[13]
• Tieto Corporation: EUR 90 million buyback program, funded by divestment proceeds, announced July 22.^[13]
• Alimentation Couche-Tard: Renewed share repurchase program, July 16.^[13]
• OceanaGold (OGC): Renewed Normal Course Issuer Bid, up to 22 million common shares, approved by the TSX, July 22.^[13]
• Eni (E): Repurchased EUR 100 million in treasury shares on Euronext Milan, July 13–17.^[13]
• Prosus: Open-ended repurchase program update, July 21.^[13]

Buybacks are the steady counterflow to issuance — they absorb supply without adding new shares. Jabil’s $1.5 billion authorization is the largest single announcement in the group, and it is worth noting that buyback activity this week skews toward mid-caps and international names rather than mega-cap tech, which may reflect the same cooling in AI-infrastructure sentiment that pressured Csquare’s IPO.

What to Watch Next

The Convergence Risk

The thing to watch is not any one of these in isolation. It is the interaction. If the Reg NMS comment period produces heated pushback that delays or complicates the rescission, market participants face a longer period of uncertainty about routing obligations — which could temporarily suppress liquidity rather than improve it. If overnight trading launches while the trade-through rule is still in force, the overnight price bands become the primary guardrail in a session with no NBBO-equivalent protection. And if SpaceX’s first lockup tranche hits in early August while the broader market is digesting earnings season, the supply shock arrives when buyer attention is already fragmented.

The base case is that each of these developments proceeds on its own timeline without meaningful interaction effects. The tail case — maybe 25% — is that the lockup cliff, the IPO pricing weakness, and the market-structure uncertainty compound into a late-summer liquidity event that forces the SEC or exchanges to accelerate or modify their plans. That case is not the forecast, but it is the one worth watching for.