FINRA Requests Information On Order Routing Conflicts

In November, FINRA will distribute to select firms a targeted exam letter on order routing conflicts. The targeted exams are used to gather information, conduct investigations, and inform responses to particular regulatory issues.

The Trading & Financial Compliance Examinations ("TFCE") section of FINRA's Market Regulation Department is conducting a review of the impact of inducements on order routing practices. Order routing inducements include payment for order flow and maker-taker rebates. Specifically, TFCE is soliciting information regarding the following:

1. how a firm quantifies benefits to customers from the firm's receipt of order routing inducements;
2. how a firm fulfills its duty of best execution and how a firm quantifies the benefits to customers of particular types of routing orders (e.g. routing orders that may have differing transaction costs in different market centers); and