Notice to Members 06-58
SEC Approves Amendments to Rule 2320(a) Regarding Best Execution and New Interpretive Material 2320
SEC Approves Amendments to Rule 2320(a) Regarding Best Execution and New Interpretive Material 2320; Effective Date: November 8, 2006 On August 21, 2006, the Securities and Exchange Commission (SEC) approved amendments to Rule 2320(a), the Best Execution Rule, to require that a "recipient member," as that term is defined herein, provide best execution to all transactions for or with a customer of another broker-dealer. NASD also is amending the reasonable diligence factors in Rule 2320(a) and deleting the term "interdealer" in order to modernize the text of the Best Execution Rule. Further, NASD is adopting new Interpretive Material 2320 to codify interpretive guidance concerning the applicability of the Best Execution Rule.1
The rules, as amended, are set forth in Attachment A. The amendments become effective on November 8, 2006.
Questions concerning this Notice may be directed to Kathleen A. O'Mara, Associate General Counsel, Office of General Counsel at (202) 728-8071; and Peter D. Santori, Chief Counsel, Market Regulation, Regulatory Policy & Oversight, at (240) 386-5098.
1See Securities Exchange Act Release No. 54339 (August 21, 2006), 71 FR 50959 (August 28, 2006) (Order Approving Proposed Rule Change and Amendment Nos. 1-5; File No. SR-NASD-2004-026).