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Day: November 6, 2018

SEC Adopts Disclosure Rules for Trade Routing

The SEC has adopted new rules that will require broker-dealers to deliver a standardized set of individualized disclosures about how the BD routed “not held” orders.  The SEC intends the disclosures to inform a customer about how its broker-dealer routed and handled orders to assess the impact of routing decision on execution quality.  Under the new rules, upon customer request, a BD would deliver a report covering the prior 6 months that would include information about shares executed, orders exposed to IOIs, fill rates, fees, rebates, pricing, and liquidity.  The new rules, amendments to Rule 606 under Regulation NMS, provide for 2 de minimis exceptions. The new disclosure rules go live 6 months after publication.

The new disclosure rules will add transparency to how broker-dealers assess and choose alternative trading venues and ensure institutional customers have information about fees, rebates, and payments for order flow.