Rule 605 was adopted in 2000 to help the public compare and evaluate execution quality

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FACT SHEET 
Disclosure of Order 
Execution 
Information
 
 
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Why This Matters 
Rule 605 was adopted in 2000 to help the public compare and evaluate execution quality 
among national securities exchanges, national securities associations, market makers, and 
alternative trading systems. Although Rule 605 has provided significant insight into execution 
quality,  the  content  of  the  required disclosures  has  not  been  substantively  updated  since  
2000, despite changes in the speed and nature of trading.  
 
How This Rule Applies 
The  amendments  expand  the  scope  of  reporting  entities  subject  to  Rule  605  to  include 
broker-dealers   who   introduce   or   carry   100,000   or   more   customer   accounts.   The 
amendments also specify that broker-dealers operating single dealer platforms must prepare 
a separate report for activity specific to these platforms. Further, the amendments change 
the scope and content of the standardized monthly reports required under Rule 605. 
Specifically, the amendments:  
• Expand the definition of “covered order” to include certain orders submitted outside 
of regular trading hours, certain orders submitted with stop prices, and non-exempt 
short sale orders;  
• Modify the existing order size categories to base them on both notional dollar value 
and whether  an  order  is  for  a  fractional  share,  for  an  odd-lot,  or  for  a  round  lot  or  
greater rather than number of shares;  
• Establish  four  new  order  type  categories:  marketable  immediate-or-cancel  orders,  
market orders submitted with stop prices, marketable limit orders submitted with stop 
prices, and non-marketable limit orders submitted with stop prices; and 
 
On March  6,  2024,  the  Securities  and  Exchange  Commission  adopted amendments  to  the 
disclosure  requirements  of  Rule  605  of  Regulation  NMS  for  executions on  covered  orders  in 
NMS  stocks,  which  are  stocks  listed  on  a  national  securities  exchange.  The  adopted  rule  
amendments  expand  the  scope  of  entities  subject  to  Rule  605,  modify  the  categorization  and  
content of order information reported under the rule, and require reporting entities to produce a 
summary report of execution quality. The Commission proposed the amendments on December 
14, 2022. The public comment file is available online. 
 

FACT SHEET | Disclosure of Order Execution Information  
 
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• Replace  three  existing  categories  of  non-marketable  order  types  with  four  new  
categories   of   order   types:   midpoint-or-better   limit   orders,   midpoint-or-better 
immediate-or-cancel   orders,   non-marketable   limit   orders,   and   non-marketable 
immediate-or-cancel orders. The amendments also scope in non-marketable orders 
and  orders  submitted  with  stop  prices  if  they  become  executable  during  regular  
trading hours. 
Further,  the  Commission  amended the  content  of  the  reports  required  under  Rule  605  as  
follows:  
• The time-to-execution  reporting  categories  will  be  modified  to  use  more  granular  
time-to-execution buckets with timestamp conventions of a millisecond or finer; 
• Realized  spread  statistics  will  be  required  to  be  calculated  using additional time 
horizons ranging from less than 100 microseconds to 5 minutes after the time of order 
receipt; and 
• New statistical measures of execution quality will be required, including:  
o    Average  effective  divided  by  average quoted  spread (a  percentage-based 
metric that represents how much price improvement an order received); 
o    Percentage-based  effective  and  realized  spread  statistics  that  complement 
certain dollar-based statistics; 
o    A  size  improvement  benchmark  that  could  be  used  to  calculate  whether  
orders received an execution of more than the displayed size at the quote; 
o    A size improvement statistic that indicates the amount of size improvement 
in those instances in which an order could have received size improvement; 
o    Certain statistical measures that could be used to measure execution quality 
of non-marketable orders; and  
o    Additional  price  improvement  statistics  for  market  and  marketable  orders  
showing  price  improvement  relative  to  the  best available displayed price  in  
the market, which could be a displayed odd-lot price. 
Finally,  the  amendments  require  all  entities  subject  to  the  rule  to  make  a  summary  report  
publicly available  that  would  be  formatted  in  the  most  recent  versions  of  the  schema  for  
comma  separated  values  format  (CSV)  and associated portable  document  format  (PDF) 
renderer as published on the Commission’s website. 
 
What’s Next 
The amendments will become effective 60 days after the date of publication of the adopting 
release  in  the  Federal  Register.  The  amendments  have  a  compliance  date  of 18  months 
after the effective date. 
 

FACT SHEET
Disclosure of Order Execution Information

On March 6, 2024, the Securities and Exchange Commission adopted amendments to the disclosure requirements of Rule 605 of Regulation NMS for executions on covered orders in NMS stocks, which are stocks listed on a national securities exchange. The adopted rule amendments expand the scope of entities subject to Rule 605, modify the categorization and content of order information reported under the rule, and require reporting entities to produce a summary report of execution quality. The Commission proposed the amendments on December 14, 2022. The public comment file is available online.

Why This Matters

Rule 605 was adopted in 2000 to help the public compare and evaluate execution quality among national securities exchanges, national securities associations, market makers, and alternative trading systems. Although Rule 605 has provided significant insight into execution quality, the content of the required disclosures has not been substantively updated since 2000, despite changes in the speed and nature of trading.

How This Rule Applies

The amendments expand the scope of reporting entities subject to Rule 605 to include broker-dealers who introduce or carry 100,000 or more customer accounts. The amendments also specify that broker-dealers operating single dealer platforms must prepare a separate report for activity specific to these platforms. Further, the amendments change the scope and content of the standardized monthly reports required under Rule 605.

Specifically, the amendments:

- Expand the definition of "covered order" to include certain orders submitted outside of regular trading hours, certain orders submitted with stop prices, and non-exempt short sale orders;
- Modify the existing order size categories to base them on both notional dollar value and whether an order is for a fractional share, for an odd-lot, or for a round lot or greater rather than number of shares;
- Establish four new order type categories: marketable immediate-or-cancel orders, market orders submitted with stop prices, marketable limit orders submitted with stop prices, and non-marketable limit orders submitted with stop prices; and

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FACT SHEET | Disclosure of Order Execution Information

• Replace three existing categories of non-marketable order types with four new categories of order types: midpoint-or-better limit orders, midpoint-or-better immediate-or-cancel orders, non-marketable limit orders, and non-marketable immediate-or-cancel orders. The amendments also scope in non-marketable orders and orders submitted with stop prices if they become executable during regular trading hours.

Further, the Commission amended the content of the reports required under Rule 605 as follows:

• The time-to-execution reporting categories will be modified to use more granular time-to-execution buckets with timestamp conventions of a millisecond or finer;

• Realized spread statistics will be required to be calculated using additional time horizons ranging from less than 100 microseconds to 5 minutes after the time of order receipt; and

• New statistical measures of execution quality will be required, including:

○ Average effective divided by average quoted spread (a percentage-based metric that represents how much price improvement an order received);

○ Percentage-based effective and realized spread statistics that complement certain dollar-based statistics;

○ A size improvement benchmark that could be used to calculate whether orders received an execution of more than the displayed size at the quote;

○ A size improvement statistic that indicates the amount of size improvement in those instances in which an order could have received size improvement;

○ Certain statistical measures that could be used to measure execution quality of non-marketable orders; and

○ Additional price improvement statistics for market and marketable orders showing price improvement relative to the best available displayed price in the market, which could be a displayed odd-lot price.

Finally, the amendments require all entities subject to the rule to make a summary report publicly available that would be formatted in the most recent versions of the schema for comma separated values format (CSV) and associated portable document format (PDF) renderer as published on the Commission’s website.

What’s Next

The amendments will become effective 60 days after the date of publication of the adopting release in the Federal Register. The amendments have a compliance date of 18 months after the effective date.

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