Welcome to the August edition of The Monitor.
It’s been a busy summer for the Surveyor team. We’ve spent a lot of time on the road meeting with clients and partners, and we’re just getting back from Florida as we start gearing up for a busy fall season. I’m looking forward to connecting with more of our community in person and meeting some new faces along the way.
August brought an important milestone for best execution with the updated Rule 605 requirements now in effect, while the proposed rescission of Rule 611 continues to raise questions about how firms evaluate execution quality as market structure evolves. We’re happy to support clients through the new Rule 605 requirements and have also made reporting easier. Beyond reporting, we continue to expand alerts and analytics for evaluating execution quality, slippage, fills, and other execution exceptions.
In this month’s Monitor, we take a closer look at best execution, what we’re watching on the regulatory front, and where you can find us this fall. We hope this issue helps you navigate what’s ahead.
— Lisa Balter Saacks, President, Trillium Surveyor
Which Compliance Officer Inspires You?
Every day, compliance officers juggle evolving regulations, new products and markets, supervisory responsibilities, and the day-to-day decisions that keep firms on track. They do a lot behind the scenes and it doesn’t always get the recognition it deserves.
International Compliance Officer Day is coming up on September 26 and we’re starting the celebration early by collecting nominations from our community so we can recognize some of the people making an impact when the holiday arrives.
Which compliance officer inspires you?
It could be a mentor, a leader at your firm, an industry friend, or someone you follow for their perspective. Nominate them by September 18 by simply replying to this email with their name and a short note on why they inspire you.
We’ll select a few nominees to recognize around Compliance Officer Day with a coffee on us.
Surveyor Product Perspective
A Closer Look at Surveyor Best Ex
Surveyor Best Ex’s 605 calculations have been updated in line with the regulatory changes effective August 1.
Alongside reporting, Surveyor gives teams daily analysis across price, speed, cost, probability of execution, and other execution-quality factors, with the flexibility to evaluate performance across orders, accounts, venues, and market conditions. Teams can surface specific execution exceptions for review, including:
- Slippage: Identify executions where price movement may have affected the customer outcome.
- Missed fills: Surface orders that may have missed available execution opportunities.
- Negative price improvement: Identify executions at prices less favorable than the relevant benchmark.
- Market-on-open: Review execution quality for MOO orders, including fractional shares.
- Stop elections: Calculate when a stop should have been elected based on market movement rather than relying on client-reported timestamps.
Regulatory Radar
- CFTC Takes a Broader Look at Prediction Markets
Prediction markets sparked a lively discussion at the CFTC Innovation Advisory Committee meeting August 20, with proposed Rule 40.11 changes and debate around where to draw the line on event contracts. The discussion went beyond individual contracts to market integrity, product governance, consumer protections, access models, and how susceptibility to manipulation should factor into what gets listed. (Source: CFTC) - Updated Rule 605 Requirements Take Effect
The amended Rule 605 requirements took effect August 1, expanding execution quality reporting and moving firms from preparation into ongoing implementation and review. (Source: SEC) - Rule 611 Moves Into Its Next Phase
The SEC’s comment period on the proposed rescission of Rule 611 closed August 17. Firms are now watching what a potential change could mean for routing, execution quality, and trade surveillance. (Source: SEC) - SEC Advances Crypto Rules While Tokenized Stocks Face NMS Questions
The SEC proposed a new crypto fundraising framework while questions remain around how tokenized equities fit within existing Regulation NMS requirements. For firms, the broader issue is how new trading models integrate with established market structure and oversight rules. (Source: SEC)
Market Structure and Compliance Trends
Rule 605 Is Here: What Changed?
The updated Rule 605 requirements are now in effect, bringing broader and more detailed execution quality reporting to the market.
A few of the key changes include:
- More firms are covered: Reporting now extends to larger broker-dealers and single- dealer platforms.
- More orders are included: Coverage expands to certain orders outside regular trading hours, stop orders, fractional shares, odd lots, and larger orders.
- More execution quality detail: New and updated measures provide greater visibility into price improvement, fill rates, execution speed, spreads, and order outcomes.
- More accessible reporting: Firms must provide standardized summary reports alongside detailed execution quality reports.
Surveyor Best Ex supports the updated Rule 605 requirements and helps firms streamline reporting.
—
Rule 611: What Best Ex and Surveillance Teams Should Be Thinking About
The proposed rescission of Rule 611 has implications beyond routing. If protected quotations no longer carry the same regulatory weight, firms may need to reconsider some of the reference points they use across both best execution and trade surveillance.
What the market is saying: Traders Magazine recently highlighted buy-side commentary that rescinding Rule 611 could give firms more flexibility to make routing and connectivity decisions based on the overall execution value offered by individual venues, including liquidity, market impact, information leakage, execution speed, quote stability, and likelihood of completing an order. Sterling Trading Tech also added that removing Rule 611 could place greater weight on best execution oversight, with the broker-dealer’s best execution duty becoming the primary protection against inferior executions.
Our perspective: That aligns with what we’re prepared to support on the best execution analytics side. More routing flexibility could put greater emphasis on evaluating actual execution outcomes in context, including price, liquidity, fill quality, trading costs, and venue performance, alongside account and market behavior. Looking across individual orders, accounts, and prevailing market conditions can help firms understand not only how an order was executed, but whether patterns in execution quality warrant further review.
For surveillance teams, the NBBO has long provided an important reference point for evaluating potentially manipulative order activity. If its role changes, surveillance models may need to adapt how they establish market context. The underlying behavior hasn’t changed, but the way firms identify and evaluate it may need to.
We explore both sides of the proposed change in our latest Perspectives:
—
Institutional Participation in Prediction Markets Takes Another Step
Cantor has begun facilitating institutional block trading in event contracts on Kalshi, expanding institutional access to prediction markets. As the market grows beyond its retail roots, increased institutional participation brings another layer of market structure, liquidity, and oversight considerations for firms entering the space. (Source: Cantor)
Poll
What’s the biggest focus for your best execution program right now?
- Execution quality analysis
- 605/606 reporting
- Reducing manual review
- Preparing for market structure changes
Participate in the community poll here.
Our Social Calendar
Catch Surveyor on the Road this Fall
We’re gearing up for a busy fall and looking forward to connecting with clients, partners, and new friends across the industry. Here’s where you can find the Surveyor team:
Dallas
- STA Dallas | September 9–12
Washington, D.C.
- SEC Roundtable on Preparations for 24-Hour Trading | September 17
New York City
- PREDICT Conference | October 6–7 | Speaking
- STA Annual Market Structure Conference | October 15–17
- FIX Americas Trading Conference | October 29
- TabbFORUM Best Execution Symposium | November 2
Orlando
- NSCP National Conference | October 25–28 | Sponsoring
Chicago
- FINRA Small Firm Conference | October 27–28 | Sponsoring
- FIA Futures & Options Expo | November 2–4
Charleston
- STA Charleston | November 11–13
Heading to one of these events? Reach out to set up time with the Surveyor team in person.
Let’s Connect!
Let’s discuss how your team can stay ready as markets evolve and oversight expectations grow. Set up a brief time to chat here.