The SEC Proposes Regulation Best Execution

I. Introduction

On December 14, 2022, the Securities and Exchange Commission (the SEC or Commission) proposed Regulation Best Execution (Proposed Reg Best Ex),¹ which would establish through Commission rules a federal best execution regulatory framework for brokers, dealers, government securities brokers, government securities dealers and municipal securities dealers. As proposed, Proposed Reg Best Ex consists of three rules: (1) Rule 1100, which sets forth "the best execution standard"; (2) Rule 1101, which requires policies and procedures; and (3) Rule 1102, which requires an annual report.

This alert discusses the requirements of Proposed Reg Best Ex and the significant impact the proposal may have on the industry, if adopted. Proposed Reg Best Ex goes beyond the existing best execution regulatory regime set forth by the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB).² The implementation of Proposed Reg Best