U.S. broker-dealers may soon have to post more info on routing orders

Wed Jul 13, 2016 4:04pm EDT
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By Lisa Lambert

WASHINGTON (Reuters) - U.S. broker-dealers would be required to post information for the first time on how they route large investors' trading orders under a rule proposed by the Securities and Exchange Commission on Wednesday.

The proposal would also require additional information on orders from smaller, individual customers.

The SEC hopes the proposed changes would make it easier for investors to see possible conflicts of interest in how their brokers execute their trades, SEC Chair Mary Jo White said at a meeting of the commissioners.

They would set a standard across the industry on what information should be provided on handling institutional orders.

All three commissioners approved releasing the proposal, which now goes into a 60-day public comment period.

White said technology now allows automatic handling of both institutional and retail orders through complex algorithms and routing systems, and has created diverse trading venues, interfaces and pricing models.

By seeing information on routing, execution, fees and rebates, customers should be able to evaluate how broker-dealers address conflicts of interest and manage the risks of information leakage, she said.

Republican Commissioner Michael Piwowar said many groups have pressed for more information about how orders are executed, including academic researchers.   Continued...

A general exterior view of the U.S. Securities and Exchange Commission (SEC) headquarters in Washington, June 24, 2011.   REUTERS/Jonathan Ernst