SEC Amends Order Execution Disclosure Requirements | Practical Law

SEC Amends Order Execution Disclosure Requirements | Practical Law

The SEC adopted amendments to Rule 605 of Regulation NMS to, among other things, expand the scope of entities subject to the rule, modify the information required to be reported, and require a summary report of execution quality.

SEC Amends Order Execution Disclosure Requirements

Practical Law Legal Update w-042-5887 (Approx. 3 pages)

SEC Amends Order Execution Disclosure Requirements

by Practical Law Corporate & Securities
Published on 07 Mar 2024USA (National/Federal)
The SEC adopted amendments to Rule 605 of Regulation NMS to, among other things, expand the scope of entities subject to the rule, modify the information required to be reported, and require a summary report of execution quality.
On March 6, 2024, the SEC adopted amendments to the order execution disclosure requirements of Rule 605 of Regulation NMS under the Exchange Act. Rule 605 was originally adopted in 2000 to help with the evaluation of order execution quality among different market centers, but it has not been substantively updated since its adoption.
The final rules will, among other things:
  • Expand the scope of reporting entities subject to Rule 605 to include larger broker-dealers.
  • Modify the information required to be reported under the rule, including changes to the categorizations by order size and type.
  • Require time-based metrics to be recorded at a more granular level reflecting current market speeds.
  • Require all reporting entities to make a summary report available.
In June 2023, FINRA also requested comment on a proposed rule to require members to provide FINRA with their Rule 605 order execution quality reports for publication in a centralized location on FINRA's website, including the additional summary reports now adopted by the SEC (see Legal Update, FINRA Requests Comment on Proposal to Publish Order Execution Quality Reports on FINRA's Website).
The final rules will become effective 60 days after publication in the Federal Register. Compliance with the final rules will be required 18 months after the effective date.
For up-to-date information on the status of significant SEC rulemaking, see Practice Note, SEC Rulemaking Tracker.