SEC Reg Best Interest

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Electronic Blue Sheets (EBS) - Overview

 

Transaction Fee Pilot Working Group - Overview

The SEC approved a proposed rule to conduct a Transaction Fee Pilot for NMS Securities designed to study the effects that transaction-based fees and rebates may have on and the effects that changes to those fees and rebates may have on order routing behavior, execution quality, and markit quality.  The SEC announced a 60 day comment period in which interested industry participants may raise concerns.  FIF is currently holding working group calls to discuss the content of the rule proposal and comments.  To view the text of the rule, please follow the link here.

TRACE - Overview

Effective Monday, July 10, 2017, FINRA member firms will be required to report transactions executed in Treasury securities (Treasuries) to TRACE.

The Treasury transaction message formats closely resemble the current TRACE Corporate format, with some differences, most notably:

  • The Trading Market Indicator, and existing P1 and S1 designations, will not be supported.
  •  A When Issued Indicator has been added.
  • The Trade Price field has been expanded to support 11 decimal places.
  • A Price Type has been added to designate the transaction price format.
  • The Execution Time has been expanded to support microseconds, and,
  • Modifier 4 will contain new values.

 

FIF Member Submitted Questions

As a service to FIF members, the Program Office has assisted firms seeking information from regulators or their FIF peers to support regulatory reporting or to address certain compliance, operational, or technical challenges. The Program Office will pose members’ questions to the regulators or other FIF members anonymously, to obtain clarification on rules and requirements, or methods employed by other practitioners. Please note the following is provided on a best efforts basis. 

While the current questions and answers are focused on Electronic Blue Sheets (EBS), this section will be expanded to include other topics as needed. 

Electronic Blue Sheets (EBS) FIF Q&A

 

FINRA CARDS - Overview

This Working Group addresses FINRA's Comprehensive Automated Risk Data System (CARDS) proposal. CARDS will allow FINRA to collect account information on an automated and regular basis, as well as account activity and security identification information that a firm maintains as part of its books and records. 

 

See Regulatory Notice 13-42 and Comment Letters here.

Consolidated Audit Trail (CAT) - Q&A

Retail Execution Quality

FIF has launched a program to provide retail investors with more visibility into execution quality measures. Through the FIF program, broker-dealers are voluntarily publishing standardized statistics that measure the quality of trade executions on retail investor orders in exchange-listed stocks. Several FIF member firms have agreed to produce a report each quarter that is meaningful and understandable to retail investors.  All FIF broker-dealer members are invited to participate.

Currently, the SEC requires executing broker-dealers to make “605/606 Reports” available to investors; however, these reports do not provide the level of information that allows a retail investor to gauge how well a broker-dealer typically fills a retail order when compared to the “national best bid or offer” (NBBO) at the time the order was received by the executing broker-dealer. In order to better provide investors with execution quality measures, broker-dealer firms participating in this FIF initiative are providing more robust statistics listed below. And, to aid in retail investors’ understanding of the statistics included in these reports, a definition of terms and a set of Frequently Asked Questions to explain the meaning of each metric is also provided.

Participating firms are publishing the following metrics of their retail trade executions in exchange-listed stocks, grouped by various order size ranges:

  • Average size of orders, in shares, within each range
  • Percent of shares in market orders that were executed at current market quote or better
  • Percent of shares in market orders that received price improvement
  • Savings received on an average order as a result of price improvement
  • Average execution speed, in seconds, between order routing and trade execution

The FIF template for Retail Execution Quality Statistics are available here

The FIF template for Retail Execution Quality Statistics from the Wholesale Market Maker’s Perspective is available here.   

For additional information, contact fifinfo@fif.com.

SEC Rule 606 - Q&A