November 18, 2022

FINRA Proposes to Adopt New OTC and NMS Security Reporting Requirements

FINRA proposed two new rules that would require broker-dealers to publish order routing disclosure reports for over-the-counter ("OTC") and National Market System ("NMS") equity securities orders.

Currently, SEC Regulation NMS Rule 606(a) ("Disclosure of order routing information") requires broker-dealers to publicly disclose specified information about their order routing practices for NMS securities (generally, listed stocks and options). The proposed new FINRA Rule 6470 ("Disclosure of Order Routing Information for OTC Equity Securities") would require broker-dealers to provide similar handling information, with modifications to account for differences between the market for NMS and OTC securities, for unlisted stocks that are not currently covered by Rule 606, including (i) domestic OTC equity securities, (ii) American depositary receipts and foreign ordinaries that are OTC equity securities and (iii) Canadian-listed securities trading in the U.S. as OTC equity securities.

In addition, FINRA is proposing Rule 6151 (“Disclosure of Order Routing Information for NMS Securities”), which would require broker-dealers that are required to publish a report pursuant to Rule 606 to provide the report to FINRA, in the manner prescribed by FINRA, within the same time and in the same formats that such report is required to be made publicly available under Rule 606.

FINRA said that the information provided in accordance with these new rules would be made available to the public free of charge and without restrictions, and that it believes these changes would make the existing disclosures more accessible to investors.

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