SEC Rule 606 ("Rule 606") requires broker-dealers, such as BofAS™, that route customer orders in equity and option securities, to make publicly available quarterly reports that, among other things, identify the market centers to which customer orders are routed for execution.
The Rule 606(a)(1) Report provides information on the routing of held, "non-directed orders" — any order that the client has not specifically instructed to be routed to a particular venue or market center for execution. For these non-directed orders, BofAS™ has selected the execution venue on behalf of its clients.
The Rule 606 Report presents the order routing information by calendar month and is divided into three sections per month:
- Section 1 is for NMS stock orders in securities included in the S&P 500 Index;
- Section 2 is for NMS stock orders in securities that are not included in the S&P 500 Index;
- Section 3 is for NMS securities that are exchange–listed options.
Each section of the Report includes information concerning certain market centers to which BofAS™ has routed orders, sets forth the percentage of various types of non-directed orders routed to these market centers (e.g., market, marketable limit, non-marketable limit, other), and discusses the material aspects of BofAS™ relationship with these market centers. Material aspects of the relationship include a description of the terms of any payment for order flow and any profit-sharing arrangements that may influence a broker-dealer’s order routing decision.
BofAS™ is required under Rule 606 to disclose the following information for the top ten venues to which the largest number of total non-directed orders were routed for execution, and any venue to which five percent or more of non-directed orders were routed for execution: the net aggregate amount of any payment for order flow received, payment from any profit-sharing relationship received, transaction fees paid, and transaction rebates received, both as a total dollar amount and per share for: non-directed market orders, non-directed marketable limit orders, non-directed non-marketable limit orders, and other non-directed orders.
Rule 606 also requires BofAS™ to disclose to its customers, upon request, for held orders in NMS stocks and orders in NMS securities that are option contracts, the identity of the venue to which the customer's orders were routed for execution in the six months prior to the request, whether the orders were directed orders or non-directed orders, and the time of the transactions, if any, that resulted from such orders.
Lastly, Rule 606(b)(3) requires BofAS™ to provide a customer, upon request, an individualized report concerning how BofAS™ handed that customer’s not held orders in NMS stocks for the prior six months. The Rule 606(b)(3) report will be divided into separate sections for a customer’s directed orders and non-directed orders, in conformance with the XML schema published on the SEC website, and is required to be produced within seven business days of the customer’s request.
BofAS™ order routing information required under SEC Rule 606(a)(1) for the period Q1 2020 through the present is available at the following link: http://public.s3.com/rule606/bofas
More details regarding Rule 605, Rule 606 and the SEC interpretation related to these new rules can be obtained directly from the SEC and FINRA. Should you have any questions regarding Rule 605, Rule 606 or BofAS™ best execution practices and procedures, please contact your sales representative or our Compliance Department at:
BofA Securities, Inc.
One Bryant Park
Bryant Park Tower, 5th Floor
New York, NY 10036
Attn: Equity Compliance Dept
