In separate letters, the MFA and the Futures Industry Association Principal Traders Group ("FIA PTG") suggested revisions to submitted comments on an SEC proposal to expand certain order-handling disclosure requirements for broker-dealers.

The MFA "strongly supports the [SEC] initiative to enhance order handling disclosure to investors and believes that it could improve transparency and the ability of investors to evaluate their execution quality." The MFA insisted that the proposal "should set a minimum or 'floor' for broker-dealers to make order handling disclosure to institutional customers" and "not limit the information broker-dealers provide or how it's provided to investors." Specifically, the MFA recommended that the SEC:

  • create a minimum level of order routing disclosure which broker-dealers would provide, upon request, to an institutional customer;
  • require that all institutional investor orders, rather than just those over $200,000, be subject to disclosure requirements in a broker-dealer's institutional customer order routing report;
  • provide a new or small broker-dealer with a de minimis exemption, but require such broker-dealers to provide individual institutional customer's order routing reports upon request; and
  • provide a broker-dealer with greater flexibility in categorizing its order routing strategies for institutional customer reports, rather than report order routing via the narrowly defined strategies of aggressive, neutral or passive.

The FIA PTG supported these requirements of the proposal:

  • "standardized customer-specific institutional order handling information in XML format that would be readily available to customers upon request in order to provide more relevant routing information to retail customers;
  • aggregated order routing data for both institutional and retail orders available on public websites";
  • transparency for trading venue order matching, trading venue services, and order routing practices; and
  • public reporting of all Treasury cash transactions in the secondary market.

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