SEC Rule 606

On November 2, 2018, the Securities and Exchange Commission published a Final Rule requiring industry members to engage in several changes with respect to SEC Rule 606.  Specifically, Amended Rule will require a broker-dealer, 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 new disclosures will, among other things, provide the customer with information regarding the average rebates the broker received from, and fees the broker paid to, trading venues.   

The Commission also adopted two exceptions designed to minimize the implementation costs of the new disclosure requirement on the broker-dealer industry, particularly small broker-dealers.  The rule also includes enhancements to the quarterly public reports that broker-dealers are already required to publish.

The FIF Rule 606 Working Group will assist industry members in meeting the implementation-related requiremetns of the Amended Rule.