The Securities and Exchange Commission (SEC) proposed a series of rules Wednesday that would change the way securities are sold in U.S. markets and create new disclosures for broker-dealers and others seeking to trade securities on behalf of retail investors.

The SEC passed four proposals that attempt to make it easier for retail investors to receive the best prices for their trades, would change broker-dealers’ obligations for what constitutes “best execution” of trades for retail investors, and would require new disclosures on the treatment of retail orders. The agency also adopted amendments to an unrelated rule on insider trading.

Comment periods on the four proposed rules would last until March 31 or 60 days after publication in the Federal Register, whichever is later.

The proposed rule changes are part of the SEC’s response to the “meme stocks” craze of 2021, in which retail investors used social media to pump up the value of moribund stocks like GameStop, AMC Entertainment, and Blackberry, only to watch the value of those stocks plummet as fast as they rose. The proposals also address the role of middlemen in the process, including off-exchange dealers (wholesalers) and no-fee fintech trading apps like those offered by Robinhood.

The proposed rules address what SEC Chair Gary Gensler has categorized as competitive disadvantages for retail investors that are baked into the market because of a lack of transparency and lack of competition.

“Today’s markets are not as fair and competitive as possible for individual investors—everyday retail investors. This is in part because there isn’t a level playing field among different parts of the market: wholesalers, dark pools, and lit exchanges,” said Gensler in a press release. “Further, the markets have become increasingly hidden from view, especially for individual investors. These everyday individual investors don’t have the full benefit of various market participants competing to execute their marketable orders at the best price possible.

“Thus, today’s proposal is designed to bring greater competition in the marketplace for retail market orders. I think it makes sense for the market, and for everyday individual investors, to allow the broader market to compete for their orders.”

Ninety percent of orders by retail investors are routed by broker-dealers through off-exchange dealers who execute the trades at prices that disadvantage retail investors to the tune of an estimated $1.5 billion per year, the SEC said.

The agency proposed barring off-exchange dealers from executing trades internally. Instead, those trades would be exposed to competition in a “qualified auction” operated by an “open competition trading center,” the SEC said. This revamped system would give retail investors “opportunities to trade directly with individual investor orders that are mostly inaccessible to them in the current market structure,” according to an agency fact sheet.

The SEC also proposed a new rule, Regulation Best Execution, that would create a regulatory framework that would require broker-dealers to “establish, maintain, and enforce written policies and procedures reasonably designed to comply with the proposed best execution standard,” the agency said in a press release. “Further, the proposal would require these policies and procedures to address how broker-dealers will comply with the best execution standard and how they will determine the best market and make routing or execution decisions for customer orders.”

The Financial Industry Regulatory Authority (FINRA) already has a “best execution” regulation that requires broker-dealers to conduct “regular and rigorous” reviews of execution quality of customer orders.

The SEC’s rule would take FINRA’s requirements a step further by establishing a best execution standard for broker-dealers. A broker-dealer’s best execution standard would be established, maintained, and enforced by a series of policies and procedures, according to an SEC fact sheet. Broker-dealers would be required to review the execution quality of their customer transactions at least quarterly and review best execution policies and procedures at least annually. Other policies and procedures would outline necessary disclosures to be made by broker-dealers who are in a “conflicted transaction” with a retail investor.

“At its open meeting today, the SEC issued a package of extremely complicated equity market structure rule proposals under the Exchange Act that, if adopted, will change the landscape for how retail orders are quoted, priced, routed, and filled,” said Gail Bernstein, general counsel for the Investment Adviser Association (IAA). The IAA did not take a position on the proposed rule changes but said it would review them carefully.

Separately, the SEC approved amendments to a rule that allows corporate insiders and companies to schedule the purchase or sale of securities in advance, accompanied by certain disclosures, in order to avoid claims of insider trading.

Rule 10b5-1, first adopted in 2000, allowed corporate insiders to develop an affirmative defense to trade stock without running afoul of insider trading rules. They could schedule sales of securities based on a set contract or based on verbal instructions to another person to execute a trade in the instructing person’s account at a certain date or time or as part of a written plan that stated the trader was not aware of material nonpublic information.

The rule had been criticized because it had loopholes, like allowing scheduled trades by corporate insiders to be executed on the same day. The amendments to the rule add new conditions, including cooling off periods for directors, officers, and persons other than the issuer; required new disclosures related to the issuers’ insider trading policies; and new disclosures related to executive and director compensation regarding equity compensation awards, according to an SEC fact sheet.

The amendments to the rule will take effect 60 days after publication in the Federal Register.