STA discussion document with congressional staff on: Regulation of NMS Stock Alternative Trading Systems and Disclosure of Order Handling Information.
Regulation of NMS Stock Alternative Trading Systems; File No. S7- 23-15 (“Reg ATS-N”)
STA wants to assist the Commission in the implementation of any final amendments to Reg ATS
and we are seeking an update on recommendations made in STA Comments letters which
included the following recommendations:
• Questions in the enhanced filing requirements should be reframed into yes/no questions
• The enhanced filing requirement pertaining to fee schedules should be made voluntary
in order to provide higher quality data to market participants and to do no harm to a
subset of NMS Stock ATS operators.
• The Commission should take into account the impact Form ATS-N has on firms described
in the Proposal as “multi-service broker-dealers” to ensure that the enhanced filing
requirements do not conflict with the Commission’s directives for assuring fair
competition between and among market participants.
• Amendments to effective Form ATS-N should not be made public until they are effective,
after which a public notice would be issued to provide disclosure prior to
Disclosure of Order Handling Information; File No. S7-14-16.
STA wants to assist the Commission in the implementation of any final rule regarding Disclosure
of Order Handling Information, and STA is seeking an update on recommendations made in STA
letter to the Commission which included the following recommendations:
• The enhanced disclosures on payments and fees on retail customer orders should be
provided in a more general disclosure format for retail customers to consume.
• The determination of retail customer and institutional customer should be based on a
format other than order size.
• The Commission should provide clarity on the level of obligation a broker-dealer who
provides algorithm trading services will have to a broker-dealer who is using these
services in the course of executing orders on behalf of their institutional customers.
• The categorization of algorithms should not be included in the final rulemaking.
• Proposed amendments to Rule 606, which require the public availability of reports,
should be limited to non-directed orders.
• Reporting exemptions for brokers and dealers with di minimis amounts of institutional
orders or customers should be allowed. STA recommends that a 5% threshold, or
measure of executed shares as a percentage of all executed shares, be used in
determining if a broker dealer executes a di minimis amount of institutional orders, and
therefore be exempt from reporting these orders.
• We do not believe options contracts should be included in the definition of “institutional
PDF version here.