SEC Alert! SEC proposing new rules (386 pages) relating to a broker-dealer’s duty of best execution. Enhances the existing regulatory framework calling for more robust policies and procedures for broker-dealers engaging in certain conflicted transactions with retail customers.

by Dismal-Jellyfish

public-inspection.federalregister.gov/2022-27644.pdf

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public-inspection.federalregister.gov/2022-27644.pdf

While the Commission believes the existing regulatory framework concerning the duty of best execution has helped broker-dealers fulfill their duty to their customers, the Commission believes this regulatory framework can be made more effective. In particular, while FINRA and the MSRB have established best execution rules and provided guidance on how broker-dealers should achieve best execution in a variety of contexts, and generally require broker-dealers to have procedures for compliance with relevant laws and rules, the Commission believes it is appropriate to propose its own comprehensive and detailed best execution requirements. The Commission understands that, currently, broker-dealers’ best execution policies and procedures, and the documentation relating to their best execution practices, may vary. However, as described in section III.A below, the Commission believes that customers would benefit from consistently robust best execution practices by broker-dealers, and the execution of retail customer orders by broker-dealers that have certain order handling conflicts of interest warrants heightened attention by those broker-dealers.2

That sure seems like the SEC calling out FINRA and MSRB in the politest most official way possible–they aren’t robust enough!

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