SEC adopts amendments to enhance the disclosure of order execution information.

SEC adopts amendments to enhance the disclosure of order execution information.

Washington, DC, March 6, 2024
The Securities and Exchange Commission today approved rule modifications to improve the information required by Rule 605 of Regulation NMS for order executions in national market system equities (NMS stocks), which are stocks listed on a national securities exchange. Rule 605 was implemented in 2000 to assist the public in comparing and evaluating execution quality across various market centers.

“In the 24 years since Rule 605 was adopted, our equity markets have been transformed by ever-evolving technologies and business models,” stated Gary Gensler, Chairman of the SEC. “I am pleased to support this adoption because it will improve transparency for execution quality and facilitate investors’ ability to compare brokers, thereby enhancing competition in our markets.”

The final modifications broaden the scope of businesses subject to Rule 605, change the classification and substance of order information needed to be reported under the rule, and require reporting entities to provide a summary report on execution quality. The revisions broaden the scope of businesses required to file monthly execution quality reports to include broker-dealers with a greater number of client accounts and single dealer platforms. Furthermore, the modifications broaden the definition of a “covered order” to include orders placed during ordinary trading hours, orders submitted with stop prices, and some short sell orders. The modifications will collect more relevant execution quality information for certain order types by requiring data to be submitted from the moment such orders become “executable.”

Furthermore, the changes affect how orders are classified by order size and order type. As part of the order size category modifications, Rule 605 is amended to record execution quality information for fractional share orders, odd-lot orders, and larger-sized orders. The revisions also change the time-to-execution categories, requiring the average time to execution to be recorded in millisecond or finer increments and computed for each order. Furthermore, the amendments change the information that must be reported under the rule, adding realized spread time horizons and requiring new statistical measures of execution quality, such as average effective divided by quoted spread (a percentage-based metric that represents how many price improvement orders received) and size improvement statistics. Finally, the revisions compel all businesses subject to Rule 605 to publicly provide a summary report.

The adopting release is available at and will be published in the Federal Register. The modifications will be effective 60 days after the adopting release is published in the Federal Register. The modifications take effect 18 months from the effective date.


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