Markets & Stocks
Levitt to brokers: clean up orders
November 4, 1999: 5:22 p.m. ET

SEC chairman calls upon brokers to improve order taking and execution
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NEW YORK (CNNfn) - Arthur Levitt, Chairman of the Securities and Exchange Commission, called on brokers Thursday to improve their order-taking and procedures.
     Levitt, speaking at the Securities Industry Association's annual meeting in Boca Raton, Fla., praised brokers who do their best to ensure customers receive quality execution, but also raised some concerns.
     "I worry the best execution may be compromised by payment for order flow, internalization, and certain other practices that can present conflicts between the interests of brokers and their customers," Levitt said.
     Levitt said he was troubled by some of the preliminary findings of an SEC review of how firms are complying with their best execution obligations.
     While payment for order flow is legal, Levitt said some firms are apparently allowing these payments or other factors affect which markets receive their orders, which comes at the expense of quality executions.
     Levitt said the number of complaints and questions the SEC receives from investors about execution quality proves the need for better dialogue and disclosure, but added rule-making was not the way.
     "We must not enter the millennium handcuffed by potentially cumbersome, and perhaps even outdated restrictions," he said. "But future uncertainties should not put the duty of best execution on hold."
     Levitt called on the financial news media to help educate investors about best execution quality in reviews of retail brokerage services. He also said the SEC published guide lines on its Web site that explain the basics of order routing, payment for order flow and internalization.
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Levitt pushes reforms - Oct. 18, 1999


Securities and Exchange Commission

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