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SEC Rule 606 newsletter                                                                                                      October 19

 
 
 

Best Execution

606 newsletter

 

The latest industry insights and regulatory updates

 

Welcome note

As crunch time for compliance approaches and industry participants seek final implementation, we share with you updates about the recent amendments to the SEC 606 rule, its challenges, and tools for compliance.

 

In this edition we bring to you the top three things broker-dealers need to think about for 606 compliance.

 

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John Jannes
Director & Head of Product of Trading Analytics, IHS Markit


 

Industry insight

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As we head into 2020 many US broker-dealers are preparing for new mandates on how to report transactions back to customers. To address the implications of the updates to Rule 606, IHS Markit recently hosted an industry roundtable in New York, where we discussed best practices for meeting the SEC’s requirements.

Find out the top three takeaways that broker-dealers need to think about. 

read More

Regulatory updates

On August 16 2019 the SEC published FAQs that provided clarity on a number of topics including look-through, fees/rebate, further roundtable orders, and IOIs. Following the FAQ publication, on September 4 2019 the SEC published an order granting exemption from certain requirements of the amended Rule 606 of Regulation NMS. The order granting exemption now breaks out the reporting obligations into deadlines listed below. 

  • Data collection for the 606(a)(1) report is due in January 1 2020, with the first report due by April 30 2020. 
  • Data collection for the 606(b)(1) report is due October 1 2019, with the first report due by November 2019. 
  • Data collection and reporting dates for the 606(b)(3) report is based on broker-dealer capacity:
    • For broker-dealers engaged in self-routing*, data collection is due January 1 2020, with the first report due February 25 2020. 
    • For broker-dealers engaged in outsourced-routing**, data collection is due April 1 2020, with the first report due May 26 2020. 

*Self Routing – when a broker-dealer receives a customer’s order and routes it (or child orders thereof) to venues using its own systems

 

**Outsourced Routing – when a broker-dealer receives a customer’s order and utilizes the systems of another broker-dealer to route it (or child orders thereof) to venues.

 

Even with the FAQs published there are some outstanding questions. The FIF is planning to submit outstanding questions to the SEC around the 1st week of November 2019.

 

In the meantime, IHS Markit will continue to adjust the service needed as soon as additional information becomes available.


Product updates

To help monitor and measure execution quality while fulfilling best execution obligations, market participants need a partner that understands the increasing complexities of the trade execution process and its impact on compliance reporting.

IHS Markit offers a comprehensive suite of compliance reporting services including a BestEx platform, SEC Rule 605/606 regulatory reporting and posting, and an integrated compliance workflow solution.

  • 606(a) and 606(b)(1) are now live and available on the new MTA platform.
  • 606(b)(3) is slated for release on 9 August 2019.
  • MTA integration with OMS providers:
    • Live:
      - Fidessa (version USTP v2018.2.19)
    • In UAT testing:
      - Bloomberg
      - Flextrade/Colorpalette
    • In process to certify:
      - Beta Access
      - Valdi NGO
      - Eze Castle/RealTick

For more information,
visit ihsmarkit.com/bestex

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If you have any questions, please email us: 606Reporting@ihsmarkit.com
 
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