The Securities and Exchange Commission adopted late Friday amendments to Rule 606 of Regulation NMS to require broker-dealers to disclose to investors new and enhanced information about how they handle investors’ orders.
The amended rule Rule 606(b)(3) requires a BD, upon a request of a customer who places a “not held” order (e.g., an order in which the customer gives the firm price and time discretion), to provide the customer with a standardized set of individualized disclosures concerning the firm’s handling of the customer’s orders, the agency explains.
The new disclosures will, among other things, provide the customer with information about the average rebates the broker received from, and fees the broker paid to, trading venues.
The amendments will be published on the Commission’s website and in the Federal Register and will become effective 60 days from the date of publication in the Federal Register. The compliance date will be 180 days from the date of publication in the Federal Register.
SEC Chairman Jay Clayton said in announcing the amended rule that “in the 18 years since the Commission originally adopted its order handling and routing disclosure rules, technology and innovation have driven significant changes in the way that our equities market functions and investors transact.”
The rule amendment “will make it easier for investors to evaluate how their brokers handle their orders and ultimately make more informed choices about the brokers with whom they do business.”