Markets Media: Rule 606 Update Nears

By Jen Fagenson

April 3, 2019

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Markets Media’s Terry Flanagan interviewed Dash’s Chief Compliance Officer, Venu Palaparthi, on the implications of the upcoming Rule 606, set to go into effect on May 20, 2019.

A lot has changed in equities markets since 2000, when the U.S. Securities and Exchange Commission adopted Rule 606 to improve public disclosure of brokers’ order-routing practices.

The NYSE-Nasdaq exchange duopoly is long gone. Electronic trading has evolved from a small corner of the market almost two decades ago, to ubiquitous now. And then-speedy trades measured in milliseconds are glacial today.

So with the old Rule 606 about as relevant today as rules pertaining to 3G mobile-phone technology, the updates the SEC outlined late last year will be substantial.

In a November 2018 release, the SEC highlighted that the rule update will require that broker-dealers provide customers more information on so-called not held orders, or those for which brokers have price and time discretion. The intent is to help investors better understand how brokers handle and route orders and assess the impact of routing decisions on order execution quality. The rule update goes into effect May 20.

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