SEC rules to make US brokers reveal where they sent client orders

The SEC has proposed new disclosure rules to provide investors with more transparency and to monitor routing decisions.

The Securities and Exchange Commission (SEC) voted to propose new rules this week, which will see brokers disclosing where they have sent client orders.

The disclosure rules would require broker-dealers providing clients with a report on where the customer’s orders have been sent and executed.

Information required includes orders that removed liquidity, provided liquidity and order routing.

Brokers will have to break down orders for the report by passive, neutral and aggressive routing strategies.

The reports will be available to clients upon request, and only applicable to orders of a market value of at least $200,000.

Chair at the SEC Mary Jo White, anticipates the rules will “bring order handling disclosure in line with modern technology and market practice.”

The rules are intended to “provide investors with more transparency” and allow regulators to “monitor broker-dealer routing decisions,” White added.

Quarterly basis aggregated reports must also be made public, detailing the handling of all institutional orders.

The Commission is set to seek public comments on the proposed new rules in the near future.