How should sub-penny quotations be incorporated in the best execution analysis of a broker-dealer?
The possibility that sub-penny quotations may be available in some markets but not in others will be an additional factor in a broker-dealer’s best execution analysis. Other relevant factors that a broker-dealer may consider are order size, trading characteristics of the security, speed of execution, clearing costs, and the cost and difficulty of executing an order in a particular market. (See NMS Release, 70 FR at 37538 n.341.) When including the existence of sub-penny quotations in the analysis, a broker-dealer may, in addition to all other relevant factors, consider the extent to which the sub-penny increment represents a materially better price that justifies the cost and difficulty of trying to obtain that price. Question 11: How will the trade-through provisions of the Intermarket Trading System (“ITS”) Plan, which covers trading in exchange-listed stocks, apply to sub-penny quotations that are permitted by the Rule? Answer: The matter is being considered by the ITS Operating Com
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