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Rule 605 and Rule 606 Execution Quality Reports
Rule 606
Rule 606 requires all broker-dealers that route orders in equity and option securities to make available quarterly reports that present a general overview of their routing practices. The reports must identify the significant venues to which customer orders were routed for execution during the applicable quarter and disclose the material aspects of the broker-dealer's relationship with such venues. In addition, the Rule requires broker-dealers to provide customers on request, a written copy of the report of the venues to which the customer's individual orders were routed.
For purposes of the Rule, the term "customer order" is defined as any order that is not for the account of a broker-dealer. The definition of "customer order" excludes any order for a quantity of a security having a market value of at least $200,000 for equity orders and $50,000 for options orders. The Term "covered securities" includes exchange-listed equities and NASDAQ National Market securities as well as NASDAQ Small-Cap equities and listed options. Large orders are excluded in recognition of the fact that a general overview of order routing practices is more useful for smaller orders that tend to be homogeneous.
Rule 606 applies to all types of orders (e.g., pre-opening orders and short sale orders), but broker-dealers must give an overview of their routing practices only for non-directed orders. The Rule excludes directed orders which are defined as orders that the customer specifically instructs the broker-dealer to route to a particular venue for execution.
Format of Quarterly Reports and Procedures for Making Reports Publicly Available:
RULE 606 REPORT ON ROUTING OF INSTITUTIONAL CUSTOMER ORDERS
This page contains the definitions for the data displayed in Rule 606 reports and download files provided by Knight Equity Markets, L.P.* (NITE [Market Participant ID]). The files are updated quarterly on or around the 25th of the month following the end of the preceding quarter.
*Knight Capital Group, Inc., parent company of Knight Equity Markets, L.P., has an ownership interest in Direct Edge ECN L.L.C.
*Knight Equity Markets, L.P. (“KEM”) routes orders to market centers, including national securities exchanges, alternative trading systems, electronic communications networks, and broker-dealers that may offer credits for orders that provide liquidity and may assess fees for orders that take liquidity. In some cases, the credits offered by a market center may exceed the charges assessed, such that a market center may make a payment to KEM in relation to orders directed to such market center.
**Knight Equity Markets, L.P. (NITE [Market Participant ID]) has revised its data of the 3rd and 4th quarters of 2009 to reflect certain corrections to the file. Please direct any questions to Frank Grampone - Managing Director
Additional information about the Rule 606 reports:
Disclaimer for SEC Rule 606
Rule 606
Rule 606 requires all broker-dealers that route orders in equity and option securities to make available quarterly reports that present a general overview of their routing practices. The reports must identify the significant venues to which customer orders were routed for execution during the applicable quarter and disclose the material aspects of the broker-dealer's relationship with such venues. In addition, the Rule requires broker-dealers to provide customers on request, a written copy of the report of the venues to which the customer's individual orders were routed.
For purposes of the Rule, the term "customer order" is defined as any order that is not for the account of a broker-dealer. The definition of "customer order" excludes any order for a quantity of a security having a market value of at least $200,000 for equity orders and $50,000 for options orders. The Term "covered securities" includes exchange-listed equities and NASDAQ National Market securities as well as NASDAQ Small-Cap equities and listed options. Large orders are excluded in recognition of the fact that a general overview of order routing practices is more useful for smaller orders that tend to be homogeneous.
Rule 606 applies to all types of orders (e.g., pre-opening orders and short sale orders), but broker-dealers must give an overview of their routing practices only for non-directed orders. The Rule excludes directed orders which are defined as orders that the customer specifically instructs the broker-dealer to route to a particular venue for execution.
Format of Quarterly Reports and Procedures for Making Reports Publicly Available:
RULE 606 REPORT ON ROUTING OF INSTITUTIONAL CUSTOMER ORDERS
This page contains the definitions for the data displayed in Rule 606 reports and download files provided by Knight Equity Markets, L.P.* (NITE [Market Participant ID]). The files are updated quarterly on or around the 25th of the month following the end of the preceding quarter.
*Knight Capital Group, Inc., parent company of Knight Equity Markets, L.P., has an ownership interest in Direct Edge ECN L.L.C.
*Knight Equity Markets, L.P. (“KEM”) routes orders to market centers, including national securities exchanges, alternative trading systems, electronic communications networks, and broker-dealers that may offer credits for orders that provide liquidity and may assess fees for orders that take liquidity. In some cases, the credits offered by a market center may exceed the charges assessed, such that a market center may make a payment to KEM in relation to orders directed to such market center.
**Knight Equity Markets, L.P. (NITE [Market Participant ID]) has revised its data of the 3rd and 4th quarters of 2009 to reflect certain corrections to the file. Please direct any questions to Frank Grampone - Managing Director
Additional information about the Rule 606 reports:
 |
SEC release adopting Rule 606. |
| |
SEC Staff Legal Bulletin No. 13 that contains frequently asked questions and answers regarding the rule. |
Disclaimer for SEC Rule 606
