SEC Adopts New Market Data Infrastructure Rules to Modernize the National Market System; Implications for Best Execution Obligations

7 January 2021
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Key takeaways:
  • On December 9, 2020 the SEC adopted amendments to the Regulation National Market System substantially restructuring the system governing the collection, consolidation and dissemination of market data for exchange-listed national market system stocks (“NMS market data”).
  • The final rule attempts to address concerns regarding the speed and quality of NMS market data by expanding the content of the data and replacing the historical “exclusive SIP” model with a partially decentralized model of “competing consolidators” to introduce competitive forces into the price-controlled market.
  • Broker-dealers and investment advisers will need to determine what, if any, changes they should make to their policies and procedures to meet their obligations to seek best execution of client transactions under this new decentralized model.