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SEC Rule 606: Disclosure of Order Routing Practices

The SEC has adopted rules to improve public disclosure of order routing practices. Under Rule 606, formerly 11Ac1-6, broker-dealers that route customer orders in equity and option securities will make available to the public, the market centers to which non-directed customer orders were routed for execution. Broker-dealers will also disclose the nature of their relationship to those market centers.

 

For the purpose of this Rule, we have included the Disclaimer Regarding Order Routing Information of our clearing firm, Interactive Brokers, LLC, below:  

Disclaimer Regarding Order Routing Information

For some products available on the Interactive Brokers ("IB") system, IB provides an order-by-order Best Execution order routing option whereby the IB system attempts to seek the best available price and other terms for a Customer's order using proprietary computerized routing algorithms ("Best Execution Routing" or "Best ECN Routing"). The descriptions of these Best Execution algorithms on this website are for general informational purposes only, and are not intended to provide a comprehensive description of how the algorithms will operate for all order types and under all market conditions. These descriptions and the operation of the Best Execution algorithms are subject to frequent change, for which notice to Customers may not be provided.

Customers who use Best Execution or Best ECN Routing for orders delegate to Interactive Brokers discretion to determine how and where to route those orders. Handling of those orders may or may not be consistent with the general description of the Best Execution algorithms provided herein, depending on the type of order as well as market conditions. IB specifically reserves the right to depart from the general order routing rules described herein.

Although Customers are advised to choose Best Execution Routing when trading products for which Best Execution Routing is available, the IB System may allow a Customer to direct an order to a specific market based upon the Customer's judgments about, among other things, the character of the market for the security (e.g. prices, volatility, relative liquidity, and pressure on available communications); the size and type of transaction, and the execution speed and quality on various markets. In such cases, if Customer elects to direct orders to a particular market center, Customer assumes responsibility for examining and directing Customer's trading in accordance with the relevant rules, policies and procedures of the market center to which the orders are routed.

IB cannot and does not warrant or guarantee that every Customer order will be executed at the best posted price. Among other things, IB may not have access to every market at which a particular product may trade; other orders may trade ahead of Customer's order and exhaust available volume at a posted price; exchanges or market makers may fail to honor their posted prices; exchanges may re-route customer orders out of automated execution systems for manual handling (in which case execution or representation of Customer's order may be substantially delayed); or exchange rules, policies, procedures or decisions or systems delays or failures may prevent Customer's order from being executed, may cause a delay in the execution of Customer's order, or may cause Customer's order not to be executed at the best posted price.

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Quarterly Broker-Dealer Order Routing Reports - 4th Quarter 2015