Mar. 31, 2023
March 31, 2023
The Commission is suggesting changes to Rule 605 of Regulation NMS to provide more information about broker executions. In response to growing competition and fragmentation in the market, SEC Rules 605 and 606 were adopted in 2000 to ensure Best Execution of all investor orders, including limit orders, no matter where they originated. Brokers are currently required to file 606 reports quarterly, but FINRA and the SEC issued risk alerts in December 2022 citing non-compliance with these reports. FINRA found that firms inaccurately reported information in the quarterly report on order routing and incomplete disclosures of material aspects of their relationships with disclosed venues. It is likely that brokers will also be non-compliant with the new 605 reports, making them of little benefit to retail investors. The accuracy of the data contained in the 605 reports is crucial for them to be useful.