would provide smaller institutional customers with information to
select the broker-dealers that promote better execution quality, to the
benefit of their investors.
    As discussed above, however, proposed Rules 606(b)(3) and (c) could
result in certain costs to broker-dealers who currently route
institutional orders, as well as those who would like to start routing
institutional orders and thus would have to comply with proposed Rules
606(b)(3) and (c). These costs could lead to a higher barrier to entry
and thereby reduce competition. However, the Commission preliminarily
believes that the costs associated with proposed Rules 606(b)(3) and
(c) are not large enough to meaningfully affect the barriers to entry
and the level of competition due to potential new entrants into the
market for institutional orders. In addition, the Commission
preliminarily believes that any negative effect on competition due to
heightened barriers to entry are justified by the expected positive
effect on competition of the disclosures required by proposed Rules
606(b)(3) and (c).
    In addition, the proposed amendments may cause broker-dealers to
change how they handle institutional orders. Given that broker-dealers
would be aware of the metrics to be used a priori, they may handle
institutional orders in a manner that promotes a positive reflection on
their respective services but customers could erroneously view a
broker-dealer's handling as suboptimal.\466\ Any changes to broker-
dealers' order routing decisions due to proposed Rule 606(b)(3) may
well be to the benefit of customers placing institutional orders, but
if broker-dealers and customers focus exclusively on the metrics in the
reports required by proposed Rule 606(b)(3), the order routing
decisions could also be viewed as suboptimal for the customers.
Customers' preferences could, therefore, be skewed toward the metrics
as opposed to their true objectives, which could skew broker-dealer
incentives, potentially limiting the efficiency and competition
benefits of the proposed amendments.
---------------------------------------------------------------------------

    \466\ The Commission preliminarily believes that the set of
metrics provide customers with the most cost effective view of
broker-dealer order handling practices, but recognizes a risk that
the information from the disclosures may not perfectly align routing
practices and execution quality.
---------------------------------------------------------------------------

    For example, suppose a broker-dealer routes institutional orders so
that the orders execute at lower cost with a higher fill rate, shorter
duration, and more price improvement than the broker-dealer's
competitors. However, it could be the case that, in order to achieve
these objectives, the broker-dealer routes the majority of non-
marketable limit order shares to the trading center offering the
highest rebate. An institutional customer that reviews the proposed
order handling reports might suspect that the broker-dealer acted in
its self-interest by selecting the highest rebate venue in order to
maximize rebates when in fact, the broker-dealer made the decision
based on factors that might not be completely reflected in the proposed
reports.\467\
---------------------------------------------------------------------------

    \467\ Id.
---------------------------------------------------------------------------

2. Effects of Proposed Amendments on Capital Formation
    The Commission preliminarily believes that the proposed amendments
to Rules 600, 605, and 606 might have positive effects on capital
formation, but the Commission notes that predicting the magnitude of
such effects is difficult as the effects likely would be indirect
rather than directly resulting from the proposed amendments.
    As discussed, the Commission preliminarily believes the proposed
amendments to Rules 600, 605, and 606 would enhance competition among
broker-dealers and trading centers resulting in better execution
quality for customers that place retail and institutional orders and to
the extent that better execution quality would lead to lower friction
in the trading process, the proposed amendments would increase market
efficiency in both the trading process and asset pricing. This could
lead to more efficient asset allocation because better execution
quality and greater market efficiency leads to more efficient
investment decisions by customers that place retail and institutional
orders.\468\ For example, lower transaction costs could allow customers
to rebalance their portfolios more frequently and more efficiently and
at more efficient prices that better reflect the true underlying value.
More efficient asset allocation could have a positive impact on capital
formation as capital is allocated to firms with the most profitable
projects, which ultimately would allow these firms to raise capital
more easily.\469\
---------------------------------------------------------------------------

    \468\ More efficient investment decisions means investing in the
securities with the expected risk and return that better fit the
customer's investment objectives.
    \469\ See supra Section V.B.8. for a discussion of how asset
allocation can relate to capital formation.
---------------------------------------------------------------------------

    In addition, there is a relation between liquidity of an asset and
the required rate of return for that asset.\470\ The less liquid an
asset is, e.g., the higher transaction costs are to buy or sell it, the
higher rate of return customers could demand as compensation. For
example, lower transaction costs for stocks could result in lower
required rates of return for stocks. This in turn could lead to lower
cost of capital for the firms, which could have a positive impact on
capital formation because it would allow firms to raise capital at more
favorable conditions.
---------------------------------------------------------------------------

    \470\ See Yakov Amihud and Haim Mendelson, Asset Pricing and the
Bid-Ask Spread, 17 Journal of Financial Economics 223 (December
1986).
---------------------------------------------------------------------------

3. Request for Comment
    In sum, the Commission preliminarily believes that as a result of
the disclosures required by the proposal bringing competitive forces to
bear on the market, the proposed amendments should enhance competition
among broker-dealers as well as trading centers to provide customers
placing both retail and institutional orders with enhanced quality of
execution. The Commission preliminarily believes that this enhanced
quality of execution should promote efficiency in the trading process
as well as pricing, which should also have a positive impact on capital
formation.
    The Commission requests comment on its analysis of the proposal's
economic effects and effects on efficiency, competition, and capital
formation. In particular, the Commission solicits comment on the
following:
    179. Do commenters believe that the Commission's analysis of the
potential economic effects of the proposal, including potential effects
on efficiency, competition, and capital formation is accurate? Why or
why not? Please provide analysis and empirical data to support your
views.
    180. Are there other effects of the proposal that the Commission
should consider? If so, please explain and provide support for your
views.
    181. Do commenters believe there are alternative mechanisms for
achieving the Commission's goal of enhancing transparency for order
routing practices while promoting efficiency, competition and capital
formation? If so, what would be the potential impacts on promotion of
efficiency, competition, and capital formation? For example, what would
be the effect of requiring broker-dealers to provide the public reports
for retail orders, on a monthly basis, rather than

quarterly? What would be the effect of requiring broker-dealers to
provide the public quarterly reports for retail orders, proposed in
Rule 606(a), broken down into exchange-traded products (ETP) and non-
ETP NMS stocks? Would the effects be the same for institutional orders
under proposed Rules 606(b) and 606(c)? Please explain and provide
support for your arguments.
    182. Do commenters believe that market participants would change
their behavior in response to the proposal? If so, which market
participants and how? What would be the costs and benefits of these
changes? How would such changes affect efficiency, competition, and
capital formation? Would these changes affect market quality and market
efficiency? Please explain.

VI. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''),\471\ the Commission requests comment on the
potential effect of the proposed amendments on the United States
economy on an annual basis. The Commission also requests comment on any
potential increases in costs or prices for consumers or individual
industries, and any potential effect on competition, investment, or
innovation. Commenters are requested to provide empirical data and
other factual support for their views to the extent possible.
---------------------------------------------------------------------------

    \471\ Pub. L. 104-121, Title II, 110 Stat. 857 (1996) (codified
in various sections of 5 U.S.C., 15 U.S.C. and as a note to 5 U.S.C.
601).
---------------------------------------------------------------------------

VII. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (``RFA'') \472\ requires Federal
agencies, in promulgating rules, to consider the impact of those rules
on small entities. Section 603(a) \473\ of the Administrative Procedure
Act,\474\ as amended by the RFA, generally requires the Commission to
undertake a regulatory flexibility analysis of all proposed rules, or
proposed rule amendments, to determine the impact of such rulemaking on
``small entities.'' \475\ Section 605(b) of the RFA states that this
requirement shall not apply to any proposed rule or proposed rule
amendment, which if adopted, would not have significant economic impact
on a substantial number of small entities.
---------------------------------------------------------------------------

    \472\ 5 U.S.C. 601 et seq.
    \473\ 5 U.S.C. 603(a).
    \474\ 5 U.S.C. 551 et seq.
    \475\ Although Section 601(b) of the RFA defines the term
``small entity,'' the statute permits agencies to formulate their
own definitions. The Commission has adopted definitions for the term
``small entity'' for purposes of Commission rulemaking in accordance
with the RFA. Those definitions, as relevant to this proposed
rulemaking, are set forth in Rule 0-10, 17 CFR 240.0-10. See
Securities Exchange Act Release No. 18451 (January 28, 1982), 47 FR
5215 (February 4, 1982) (File No. AS-305).
---------------------------------------------------------------------------

    For purposes of the Commission rulemaking in connection with the
RFA \476\ as it relates to broker-dealers, a small entity includes a
broker-dealer that: (1) Had total capital (net worth plus subordinated
liabilities) of less than $500,000 on the date in the prior fiscal year
as of which its audited financial statements were prepared pursuant to
Rule 17a-5(d) under the Exchange Act,\477\ or, if not required to file
such statements, a broker-dealer with total capital (net worth plus
subordinated liabilities) of less than $500,000 on the last day of the
preceding fiscal year (or in the time that it has been in business, if
shorter); and (2) is not affiliated with any person (other than a
natural person) that is not a small business or small
organization.\478\
---------------------------------------------------------------------------

    \476\ See id.
    \477\ 17 CFR 240.17a-5(d).
    \478\ See 17 CFR 240.0-10(c).
---------------------------------------------------------------------------

    Based on the Commission's analysis of existing information relating
to broker-dealers that would be subject to the proposed amendments to
Rule 606, the Commission preliminarily believes that such broker-
dealers do not fall within the definition of ``small entity,'' as
defined above.\479\ Further, the proposed amendments to Rule 605 to
require reports to remain posted on an Internet Web site for a
specified period of time will not have a significant impact on small
entities affected by the proposed Rule.\480\ For the foregoing reasons,
the Commission certifies that the proposed amendments to Rules 600,
605, and 606 would not have a significant economic impact on a
substantial number of small entities for the purposes of the RFA.
---------------------------------------------------------------------------

    \479\ The Commission considered FOCUS Report data in making this
determination.
    \480\ See supra Section IV.D.5.
---------------------------------------------------------------------------

    The Commission requests comment regarding this certification. In
particular, the Commission solicits comment on the following:
    183. Do commenters agree with the Commission's certification? If
not, please describe the nature of any impact on small entities and
provide empirical data to illustrate the extent of the impact.

VIII. Statutory Authority and Text of the Proposed Rule Amendments

    Pursuant to the Exchange Act, and particularly Sections 3(b), 5, 6,
11A, 15, 17, and 23(a) thereof, 15 U.S.C. 78c, 78e, 78f, 78k-1, 78o,
78q, and 78w(a), the Commission proposes to amend Sections 240.3a51-1,
240.13h-1, 242.105, 242.201, 242.204, 242.600, 242.602, 242.605,
242.606, 242.607, 242.611, and 242.1000 of Chapter II of Title 17 of
the Code of Federal Regulations in the manner set forth below.

List of Subjects

17 CFR Part 240

    Brokers, Dealers, Registration, Securities.

17 CFR Part 242

    Brokers, Reporting and recordkeeping requirements, Securities.

    For the reasons stated in the preamble, the Commission is proposing
to amend Title 17, Chapter II of the Code of Federal Regulations as
follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

0
1. The authority citation for part 240 continues to read in part as
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4,
78o-10, 78p, 78q, 78-q1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20,
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq., and
8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350;
Pub. L. 111-203, 939A, 124 Stat. 1376, (2010); and Pub. L. 112-106,
sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *

Sec.  240.3a51-1  [Amended]

0
2. Section 240.3a51-1, paragraph (a) introductory text, is amended by
removing the text ``Sec.  242.600(b)(47)'' and adding in its place
``Sec.  242.600(b)(49)''.

Sec.  240.13h-1  [Amended]

0
3. Section 240.13h-1, paragraph (a)(5), is amended by removing the text
``Section 242.600(b)(46)'' and adding in its place ``Sec.
242.600(b)(48)''.

PART 242--REGULATIONS M, SHO, ATS, AC, NMS AND SBSR AND CUSTOMER
MARGIN REQUIREMENTS FOR SECURITY FUTURES

0
4. The authority citation for part 242 continues to read as follows:

    Authority: 15 U.S.C. 77g, 77q(a), 77s(a), 78b, 78c, 78g(c)(2),
78i(a), 78j, 78k-1(c), 78l, 78m, 78n, 78o(b), 78o(c), 78o(g),
78q(a), 78q(b), 78q(h), 78w(a), 78dd-1, 78mm, 80a23, 80a-29, and
80a-37.

Sec.  240.105  [Amended]

0
5. Section 242.105 is amended by:

0
a. In paragraph (b)(1)(i)(C), removing the text ``Sec.
242.600(b)(22)'' and adding in its place ``Sec.  242.600(b)(23)''.
0
b. In paragraph (b)(1)(ii), removing the text ``Sec.  242.600(b)(64)''
and adding in its place ``Sec.  242.600(b)(69)''.

Sec.  240.201  [Amended]

0
6. Section 242.201 is amended by:
0
a. In paragraph (a)(1), removing the text ``Sec.  242.600(b)(47)'' and
adding in its place ``Sec.  242.600(b)(49)''.
0
b. In paragraph (a)(2), removing the text ``Sec.  242.600(b)(22)'' and
adding in its place ``Sec.  242.600(b)(23)''.
0
c. In paragraph (a)(4), removing the text ``Sec.  242.600(b)(42)'' and
adding in its place ``Sec.  242.600(b)(44)''.
0
d. In paragraph (a)(5), removing the text ``Sec.  242.600(b)(49)'' and
adding in its place ``Sec.  242.600(b)(52)''.
0
e. In paragraph (a)(6), removing the text ``Sec.  242.600(b)(55)'' and
adding in its place ``Sec.  242.600(b)(60)''.
0
f. In paragraph (a)(7), removing the text ``Sec.  242.600(b)(64)'' and
adding in its place ``Sec.  242.600(b)(69)''.
0
g. In paragraph (a)(9), removing the text ``Sec.  242.600(b)(78)'' and
adding in its place ``Sec.  242.600(b)(83)''.

Sec.  240.204  [Amended]

0
7. Section 242.204, paragraph (g)(2), is amended by removing the text
``Rule 600(b)(64) of Regulation NMS (17 CFR 242.600(b)(64)'' and adding
in its place ``Sec.  600(b)(69) of Regulation NMS (17 CFR
242.600(b)(69)''.
0
8. Section 242.600 is amended by:
0
a. Redesignating paragraphs (b)(52) through (83) as (b)(57) through
(88);
0
b. Adding new paragraphs (b)(55) and (56);
0
c. Redesignating paragraphs (b)(49) through (51) as (b)(52) through
(54);
0
d. Adding new paragraph (b)(51);
0
e. Redesignating paragraphs (b)(30) through (48) as (b)(32) through
(50);
0
f. Amending newly redesignated paragraph (b)(50) by removing the word
``customer'' and adding in its place ``retail'';
0
g. Adding new paragraph (b)(31);
0
h. Redesignating paragraphs (b)(1) through (b)(29) as (b)(2) through
(b)(30);
0
i. Adding new paragraph (b)(1).
0
j. Amending newly redesignated paragraph (b)(19) by removing the word
``Customer'' and adding in its place ``Retail'';
0
k. Amending newly redesignated paragraph (b)(20) by removing the word
``customer'' and adding in its place ``retail'';
0
l. Amending newly redesignated paragraph (b)(24)(ii) by removing the
word ``customer'' and adding in its place ``retail'';
    The additions read as follows:

Sec.  242.600  NMS security designation and definitions.

* * * * *
    (b) * * *
    (1) Actionable indication of interest means any indication of
interest that explicitly or implicitly conveys all of the following
information with respect to any order available at the venue sending
the indication of interest:
    (i) Symbol;
    (ii) Side (buy or sell);
    (iii) A price that is equal to or better than the national best bid
for buy orders and the national best offer for sell orders; and
    (iv) A size that is at least equal to one round lot.
* * * * *
    (31) Institutional order means an order to buy or sell an NMS stock
that is not for the account of a broker or dealer and is an order for a
quantity of an NMS stock having a market value of at least $200,000.
* * * * *
    (51) Non-marketable limit order means any limit order other than a
marketable limit order.
* * * * *
    (55) Orders providing liquidity means orders that were executed
against after resting at a trading center.
    (56) Orders removing liquidity means orders that executed against
resting trading interest at a trading center.
* * * * *

Sec.  242.602  [Amended]

0
9. Section 242.602 is amended by:
0
a. In paragraph (a)(5)(i) removing the text ``Sec.  242.600(b)(73)''
and adding in its place ``Sec.  242.600(b)(78)''.
0
b. In paragraph (a)(5)(ii) removing the text ``Sec.  242.600(b)(73)''
and adding in its place ``Sec.  242.600(b)(78)''.
0
10. Section 242.605 is amended by:
0
a. Revising the introductory text designated as a Preliminary Note; and
0
b. Adding a sentence at the end of paragraph (a)(2).
    The addition reads as follows:

Sec.  242.605  Disclosure of order execution information.

    This section requires market centers to make available
standardized, monthly reports of statistical information concerning
their order executions. This information is presented in accordance
with uniform standards that are based on broad assumptions about order
execution and routing practices. The information will provide a
starting point to promote visibility and competition on the part of
market centers and broker-dealers, particularly on the factors of
execution price and speed. The disclosures required by this section do
not encompass all of the factors that may be important to investors in
evaluating the order routing services of a broker-dealer. In addition,
any particular market center's statistics will encompass varying types
of orders routed by different broker-dealers on behalf of customers
with a wide range of objectives. Accordingly, the statistical
information required by this section alone does not create a reliable
basis to address whether any particular broker-dealer failed to obtain
the most favorable terms reasonably available under the circumstances
for retail orders.
    (a) * * *
    (2) * * * Every market center shall keep such reports posted on an
Internet Web site that is free and readily accessible to the public for
a period of three years from the initial date of posting on the
Internet Web site.
* * * * *
0
11. Section 242.606 is revised to read as follows:

Sec.  242.606  Disclosure of order routing information.

    (a) Quarterly report on retail order routing. (1) Every broker or
dealer shall make publicly available for each calendar quarter a report
on its routing of non-directed orders in NMS securities during that
quarter broken down by calendar month and keep such report posted on an
Internet Web site that is free and readily accessible to the public for
a period of three years from the initial date of posting on the
Internet Web site. Such report shall include a section for NMS stocks
and a separate section for NMS securities that are option contracts.
Such report shall be made available using the most recent versions of
the XML schema and the associated PDF renderer as published on the
Commission's Web site for all reports required by this section. Each
section in a report shall include the following information:
    (i) The percentage of total retail orders for the section that were
non-directed orders, and the percentages of total non-directed orders
for the section that were market orders, marketable limit orders, non-
marketable limit orders, and other orders;
    (ii) The identity of the ten venues to which the largest number of
total non-directed orders for the section were routed for execution and
of any venue to which five percent or more of non-directed orders were
routed for execution, the percentage of total non-directed orders for
the section routed to the venue, and the percentages of total non-
directed market orders, total non-

directed marketable limit orders, total non-directed non-marketable
limit orders, and total non-directed other orders for the section that
were routed to the venue;
    (iii) For each venue identified pursuant to paragraph (a)(1)(ii) of
this section, the net aggregate amount of any payment for order flow
received, payment from any profit-sharing relationship received,
transaction fees paid, and transaction rebates received, both as a
total dollar amount and per share, for each of the following non-
directed order types:
    (A) Market orders;
    (B) Marketable limit orders;
    (C) Non-marketable limit orders; and
    (D) Other orders.
    (iv) A discussion of the material aspects of the broker's or
dealer's relationship with each venue identified pursuant to paragraph
(a)(1)(ii) of this section, including a description of any arrangement
for payment for order flow and any profit-sharing relationship and a
description of any terms of such arrangements, written or oral, that
may influence a broker's or dealer's order routing decision including,
among other things:
    (A) Incentives for equaling or exceeding an agreed upon order flow
volume threshold, such as additional payments or a higher rate of
payment;
    (B) Disincentives for failing to meet an agreed upon minimum order
flow threshold, such as lower payments or the requirement to pay a fee;
    (C) Volume-based tiered payment schedules; and
    (D) Agreements regarding the minimum amount of order flow that the
broker-dealer would send to a venue.
    (2) A broker or dealer shall make the report required by paragraph
(a)(1) of this section publicly available within one month after the
end of the quarter addressed in the report.
    (b) Customer requests for information on order routing. (1) Every
broker or dealer shall, on request of a customer, disclose to its
customer the identity of the venue to which the customer's retail
orders were routed for execution in the six months prior to the
request, whether the orders were directed orders or non-directed
orders, and the time of the transactions, if any, that resulted from
such orders. Such disclosure shall be made available using the most
recent versions of the XML schema and the associated PDF renderer as
published on the Commission's Web site for all reports required by this
section.
    (2) A broker or dealer shall notify customers in writing at least
annually of the availability on request of the information specified in
paragraph (b)(1) of this section.
    (3) Every broker or dealer shall, on request of a customer that
places, directly or indirectly, an institutional order with the broker
or dealer, disclose to such customer within seven business days of
receiving the request, a report on its handling of institutional orders
for that customer for the prior six months by calendar month. Such
report shall be made available using the most recent versions of the
XML schema and the associated PDF renderer as published on the
Commission's Web site for all reports required by this section. For
purposes of such report, the handling of an institutional order
includes the handling of all smaller orders derived from the
institutional order. Such report shall include, with respect to the
order flow sent by the customer to the broker or dealer, the total
number of shares of institutional orders sent to the broker or dealer
by the customer during the relevant period; the total number of shares
executed by the broker or dealer as principal for its own account; the
total number of institutional orders exposed by the broker or dealer
through an actionable indication of interest; and the venue or venues
to which institutional orders were exposed by the broker or dealer
through an actionable indication of interest. Such report also shall
include the following columns of information for each venue to which
the broker or dealer routed institutional orders for the customer, in
the aggregate and broken down by passive, neutral, and aggressive order
routing strategies as defined in paragraph (b)(3)(v) of this section:
    (i) Information on Order Routing. (A) Total shares routed;
    (B) Total shares routed marked immediate or cancel;
    (C) Total shares routed that were further routable; and
    (D) Average order size routed.
    (ii) Information on Order Execution. (A) Total shares executed;
    (B) Fill rate (shares executed divided by the shares routed);
    (C) Average fill size;
    (D) Average net execution fee or rebate (cents per 100 shares,
specified to four decimal places);
    (E) Total number of shares executed at the midpoint;
    (F) Percentage of shares executed at the midpoint;
    (G) Total number of shares executed that were priced on the side of
the spread more favorable to the institutional order;
    (H) Percentage of total shares executed that were priced at the
side of the spread more favorable to the institutional order;
    (I) Total number of shares executed that were priced on the side of
the spread less favorable to the institutional order; and
    (J) Percentage of total shares executed that were priced on the
side of the spread less favorable to the institutional order.
    (iii) Information on Orders that Provided Liquidity. (A) Total
number of shares executed of orders providing liquidity;
    (B) Percentage of shares executed of orders providing liquidity;
    (C) Average time between order entry and execution or cancellation,
for orders providing liquidity (in milliseconds); and
    (D) Average net execution rebate or fee for shares of orders
providing liquidity (cents per 100 shares, specified to four decimal
places).
    (iv) Information on Orders that Removed Liquidity.(A) Total number
of shares executed of orders removing liquidity;
    (B) Percentage of shares executed of orders removing liquidity; and
    (C) Average net execution fee or rebate for shares of orders
removing liquidity (cents per 100 shares, specified to four decimal
places).
    (v) For the purposes of paragraph (b)(3) of this section:
    (A) A passive order routing strategy is one that emphasizes the
minimization of price impact over the speed of execution of the entire
institutional order;
    (B) A neutral order routing strategy is one that is relatively
neutral between minimization of price impact and the speed of execution
of the entire institutional order; and
    (C) An aggressive order routing strategy is one that emphasizes the
speed of execution of the entire institutional order over minimization
of price impact.
    The broker or dealer shall assign each order routing strategy that
it uses for institutional orders to one of these three categories in a
consistent manner for each report it prepares pursuant to paragraph
(b)(3) of this section, promptly update the assignments any time an
existing strategy is amended or a new strategy is created that would
change such assignment, and document the specific methodologies it
relies upon for making such assignments. Every broker or dealer shall
preserve a copy of the methodologies used to assign its order routing
strategies and maintain such copy as part of its books and records in a
manner consistent with Sec.  240.17a-4(b) of this chapter.

    (c) Quarterly report on institutional order handling. A broker or
dealer that receives institutional orders shall make publicly available
a report that aggregates the information required by paragraph (b)(3)
of this section, whether or not requested by a customer, on its
handling of all institutional orders for all customers for each
calendar quarter by calendar month within one month after the end of
the quarter. Such report shall be made available using the most recent
versions of the XML schema and the associated PDF renderer as published
on the Commission's Web site for all reports required by this section.
Every broker or dealer shall keep such report posted on an Internet Web
site that is free and readily accessible to the public for a period of
three years from the initial date of posting on the Internet Web site.
    (d) Exemptions. The Commission may, by order upon application,
conditionally or unconditionally exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from any provision or provisions of this section, if the
Commission determines that such exemption is necessary or appropriate
in the public interest, and is consistent with the protection of
investors.

Sec.  240.607  [Amended]

0
12. Section 242.607 is amended by:
0
a. In paragraph (a)(1) removing the words ``customers' orders'' and add
in its place ``customers' retail orders'' and removing the word
``customer'' and add in its place ``retail''.
0
b. In paragraph (a)(2) removing the word ``customer'' and add in its
place ``retail''.

Sec.  240.611  [Amended]

0
13. Section 242.611, paragraph (c) is amended by removing the text
``Sec.  242.600(b)(30)'' and adding in its place ``Sec.
242.600(b)(32)''.

Sec.  240.1000  [Amended]

0
14. In Section 242.1000 amend the definition of Plan processor by
removing the text ``Sec.  242.600(b)(55)'' and adding in its place
``Sec.  242.600(b)(60)''.

    By the Commission.

    Dated: July 13, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16967 Filed 7-26-16; 8:45 am]
BILLING CODE 8011-01-P