The Securities and Exchange Commission ("SEC") maintains two rules that require standardized public disclosure regarding broker-dealers' order execution and routing practices.
Rule 605 (formerly Rule 11Ac1-5)
Rule 605 (formerly Rule 11Ac1-5)
Requires market centers to publicly disclose monthly execution quality statistics for National Market System ("NMS") securities based on certain specified requirements. Please be aware that the statistics prepared under Rule 605 only capture a subset of the order flow handled and executed by UBS Securities LLC (UBS).
Rule 606 (formerly Rule 11Ac1-6)
Rule 606 (formerly Rule 11Ac1-6)
Requires broker-dealers to disclose on a quarterly basis an overview of their order routing practices for customers' equity and option orders in NMS securities, identifying the top venues to which customer orders are routed for execution.
In November 2018, the SEC adopted amendments to Rule 606 that introduced a new reporting format and more granular disclosures concerning payments for orders routed.
The first UBS report reflecting the SEC’s amendments is for for Q12020.
Changes in trading technology, equity market structure, trading activity, and business practices, as well as findings from our regular and rigorous reviews, may result in modifications to UBS order handling, routing, and/or execution practices. Those changes will impact the information disseminated by UBS under Rules 605 and 606.
Disclaimer of liability
UBS prepared the respective data and information (the "Reports") contained herein pursuant to Rules 605 and 606 (the "Rules") under the Securities Exchange Act of 1934. The Rules are intended to provide investors with certain information regarding broker-dealer order handling, routing and execution practices.
The Reports do not consider all factors relevant to an analysis of a broker-dealer's duty of best execution. As acknowledged by the SEC, other factors may be relevant to evaluating the quality of order execution and in making order routing decisions, including, but not limited to: (1) size of the order, (2) trading characteristics of the security involved, (3) availability of accurate information affecting choices about the most favorable market center for execution and the availability of technological aids to process such information, and (4) cost and difficulty associated with achieving an execution in a particular market center. Accordingly, the SEC stated the statistical information required by the Rules 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 customer orders."
UBS used diligent efforts to produce the Reports consistent with the Rules. However, preparation of the Reports requires compilation of a substantial amount of data, which is processed with the help of an external vendor. Accordingly, the Reports may contain errors, none of which are intentional, and UBS does not represent, warrant or guarantee that the statistics in the Reports are wholly accurate. The Reports are issued for purposes of compliance with the Rules and are not intended to solicit securities orders or any other business. Use of the Reports is strictly voluntary and does not impose on UBS any duty to any person reviewing or using the Reports. UBS shall not be liable for any person's use of the Reports or for any damages arising from the use of the Reports, including incidental and consequential damages. Certain assumptions have been made in preparing the statistics, and changes to the assumptions may have a material impact on results. The Reports do not endorse or recommend any particular security, venue or market participant.
Customers of UBS may request additional order routing information for their orders handled by UBS by contacting their UBS salesperson. There are two reports available to UBS customers under amended Rule 606:(i) the 606(b)(1) held on-demand customer report, and (ii) the 606(b)(3) not held on-demand customer report. Data collection for 606(b)(1) started on October 1, 2019 and for 606(b)(3) on January 1, 2020.
UBS, a member of FINRA, NYSE, and SIPC, is an indirect wholly-owned subsidiary of UBS Group AG. In the U.S., UBS Investment Bank’s order routing and execution services are performed by UBS.