United States

Extension of compliance date for amendments to Rule 606

AML AND COMPLIANCE NEWS  | 

The U.S. Securities and Exchange Commission (SEC) has extended broker-dealers more time to comply with amendments to Rule 606 of Regulation NMS that increases transparency around how broker-dealers handle their customers’ stock orders. The SEC extended the compliance date for the amendments to SEC Rule 606 until Oct. 1 from the original May 20 deadline. The extension of time was made to give broker-dealers enough time to make changes to their electronic order-routing systems and to test them for compliance. The SEC acknowledged that the extension of the compliance date would delay the ability of investors to better compare and monitor broker-dealers’ order-routing practices.

The amendments to Rule 606 of Regulation NMS will give institutional investors a better idea of how their order executions are affected by their brokers’ order routing decisions, shedding more light on potential conflicts of interest in the process. The information available through the current Rule 606 quarterly reports describing payment for order flow and profit sharing arrangements will also increase once the amendments are implemented. A bigger change to the amended rule is that broker-dealers will be required to collect substantially more information on order routing practices and provide clients that request it with a report on an order-by-order basis detailing how their orders were handled during the prior six months.