Notice2026-11803
Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt New Rule 11.5310 (Best Execution)
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Published
June 12, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 113 (Friday, June 12, 2026)</title>
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[Federal Register Volume 91, Number 113 (Friday, June 12, 2026)]
[Notices]
[Pages 35758-35761]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11803]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105628; File No. SR-NYSENAT-2026-16]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt New
Rule 11.5310 (Best Execution)
June 9, 2026.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on May 29, 2026, NYSE National, Inc. (``NYSE National'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes a new Rule 11.5310 governing Equity Trading
Permit (``ETP'') Holder's and Associated Person's best execution
obligations based on Nasdaq PHLX Rule General 9, Section 11 and NYSE
Rule 5310. The proposed rule change is available on the Exchange's
website at <a href="http://www.nyse.com">www.nyse.com</a> and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to delete current Rule 11.12.10 and replace
it with new Rule 11.5310 (Best Execution) to govern an ETP Holder's and
Associated Person's best execution obligation. Proposed new Rule
11.5310 is based on Nasdaq PHLX Rule General 9, Section 11 (Best
Execution and Interpositioning) and NYSE Rule 5310 (Best Execution).
The purpose of the proposed rule is to enhance customer order
protection by helping customers to receive efficient executions of
their transactions at the best market prices.
Background and Proposed Rule Change
Nasdaq PHLX Rule General 9, Section 11, adopted in 2010, was based
on NASD Rule 2320.\4\ In 2011, the Financial Industry Regulatory
Authority (``FINRA'') adopted NASD Rule 2320 as FINRA Rule 5310.\5\
Thereafter, on January 5, 2026, the Exchange's affiliate, NYSE, adopted
NYSE Rule 5310 based on the Nasdaq PHLX and FINRA rules.\6\ These rules
require broker-dealers to use ``reasonable diligence'' to ascertain the
best market for a security and execute trades in such market so that
the resultant price to the customer is as favorable as possible under
prevailing market conditions. Other self-regulatory organizations have
similar best execution rules.\7\
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\4\ See Securities Exchange Act Release No. 62877 (September 9,
2010), 75 FR 56633 (September 16, 2010) (SR-PHLX-2010-79) (Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1,
Relating to the Establishment of NASDAQ OMX PSX as a Platform for
Trading NMS Stocks).
\5\ See Securities Exchange Act Release No. 65895 (December 5,
2011), 76 FR 77042 (December 9, 2011) (SR-FINRA-2011-052) (Order
Granting Approval of Proposed Rule Change to Adopt NASD Rule 2320
(Best Execution and Interpositioning) and Interpretive Material
(``IM'') 2320 as FINRA Rule 5310 in the Consolidated Rulebook)).
\6\ See Securities Exchange Act Release No. 104543 (January 5,
2026), 91 FR 731 (January 8, 2026) (SR-NYSE-2025-50) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Adopt
New Rule 5310).
\7\ See, e.g., Municipal Securities Rulemaking Board (MSRB) Rule
G-18 (Best Execution).
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The Exchange proposes to adopt a new Rule 11.5310 that would govern
the best execution obligations applicable to ETP Holders and Associated
Persons based on the Nasdaq PHLX, the NYSE and other self-regulatory
organization rules.
Proposed new Rule 11.5310(a)(1) would provide that, in any
transaction for or with a customer or a customer of another broker-
dealer, an ETP Holder and any person associated with an ETP Holder
shall use ``reasonable diligence'' to ascertain the best market for the
subject security and buy or sell in such market so that the resultant
price to the customer is as favorable as possible under prevailing
market conditions. The proposed Rule would identify five factors among
those to be considered in determining whether an ETP Holder has used
reasonable diligence:
(1) the character of the market for the security, e.g., price,
volatility, relative liquidity, and pressure on available
communications;
(2) the size and type of transaction;
(3) the number of markets checked;
(4) accessibility of the quotation; and
(5) the terms and conditions of the order which result in the
transaction, as communicated to the ETP Holder or Associated Person.\8\
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\8\ See proposed new Rule 11.5310(a)(1)(A)-(E).
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Except for conforming changes to reflect the Exchange's membership,
proposed Rule 11.5310(a)(1) is based on Nasdaq PHLX Rule General 9,
Section 11(a)(1)(A)-(E) and NYSE Rule 5310(a)(1)(A)-(E) without change.
Proposed Rule 11.5310(a)(2) would prohibit an ETP Holder or
Associated Person, in any transaction for or with a customer or a
customer of another broker-dealer, from interjecting a third party
between the ETP Holder and the
[[Page 35759]]
best market for the subject security in a manner inconsistent with
paragraph (a)(1) of the proposed Rule. Except for conforming changes to
reflect the Exchange's membership, proposed Rule 11.5310(a)(2) is based
on Nasdaq PHLX Rule General 9, Section 11(a)(2) and NYSE Rule
5310(a)(2) without change.
Proposed paragraph (b) would provide when an ETP Holder cannot
execute directly with a market maker but must employ a broker's broker
or some other means in order to ensure an execution advantageous to the
customer, the burden of showing the acceptable circumstances for doing
so would be on the retail firm. The proposed Rule would further provide
that examples of acceptable circumstances would be where a customer's
order is ``crossed'' with another retail firm which has a corresponding
order on the other side, or where the identity of the retail firm, if
known, would likely cause undue price movements adversely affecting the
cost or proceeds to the customer. Except for conforming changes to
reflect the Exchange's membership, proposed Rule 11.5310(b) is based on
Nasdaq PHLX Rule General 9, Section 11(b) and NYSE Rule 5310(b) without
change.
Proposed paragraph (c) would provide that failure to maintain or
adequately staff a department assigned to execute customers' orders
cannot be considered justification for executing away from the best
available market; nor can channeling orders through a third party as
described above as reciprocation for service or business serve to
relieve an ETP Holder of its obligations. The proposed Rule would
further provide that channeling of customers' orders through a broker's
broker or third party pursuant to established correspondent
relationships under which executions are confirmed directly to the ETP
Holder acting as agent for the customer, such as where the third party
gives up the name of the retail firm, would not be prohibited if the
cost of such service is not borne by the customer. Except for
conforming changes to reflect the Exchange's membership, proposed Rule
11.5310(c) is based on Nasdaq PHLX Rule General 9, Section 11(c) and
NYSE Rule 5310(c) without change.
Proposed paragraph (d) would provide that an ETP Holder through
which a retail order is channeled, as described in the proposed Rule,
and which knowingly is a party to an arrangement whereby the initiating
ETP Holder has not fulfilled its obligations under the proposed Rule,
will also be deemed to have violated the proposed Rule. Except for
replacing ``his'' with ``its'' before ``obligations'' in the proposed
Rule and conforming changes to reflect the Exchange's membership,
proposed Rule 11.5310(d) is identical to Nasdaq PHLX Rule General 9,
Section 11(d). Except for conforming changes to reflect the Exchange's
membership, proposed Rule 11.5310(d) is based on NYSE Rule 5310(d)
without change.
Proposed paragraph (e) would provide that the obligations in
paragraphs (a) through (d) of the proposed Rule exist where the ETP
Holder acts as agent for the account of its customer but also where
retail transactions are executed as principal and contemporaneously
offset. Except for replacing ``his'' with ``its'' before ``customer''
in the proposed rule and conforming changes to reflect the Exchange's
membership, proposed 11.5310(e) is identical to Nasdaq PHLX Rule
General 9, Section 11(e). Except for conforming changes to reflect the
Exchange's membership, proposed Rule 11.5310(e) is based on NYSE Rule
5310(e) without change.
Proposed Rule 11.5310 includes Supplementary Material based on
Nasdaq PHLX Rule General 9, Section 11(f) and the supplementary
material to NYSE Rule 5310 to provide additional guidance and clarity
regarding the obligations of ETP Holders and Associated Persons with
respect to best execution requirements.
First, the Exchange would include an introductory paragraph that
provides that proposed Rule 11.5310(a) requires, among other things,
that an ETP Holder or any person associated with an ETP Holder comply
with paragraph (a) when customer orders are routed to it from another
broker/dealer for execution, and that the proposed Supplementary
Material addresses certain interpretive questions concerning the
applicability of the best execution rule. Except for conforming changes
to reflect the Exchange's membership, the proposed text is based on the
first full paragraph of Nasdaq PHLX Rule General 9, Section 11(f) and
the first full paragraph to the Supplementary Material of NYSE Rule
5310 without change.
Proposed Supplementary Material .01 titled ``Definition of Market''
would define ``market'' and provides that the singular or plural term
should be construed broadly, and it encompasses a variety of different
venues, including, but not limited to, market centers that are trading
a particular security. Proposed Supplementary Material .01 further
provides that the expansive interpretation is meant to both inform
broker-dealers as to the breadth of the scope of venues that must be
considered in the furtherance of their best execution obligations and
to promote fair competition among broker-dealers, exchange markets, and
markets other than exchange markets, as well as any other venue that
may emerge, by not mandating that certain trading venues have less
relevance than others in the course of determining a firm's best
execution obligations. Proposed Supplementary Material .01 is based on
the second full paragraph of Nasdaq PHLX Rule General 9, Section 11(f)
and Supplementary Material .01 of NYSE Rule 5310 without change.
Proposed Supplementary Material .02, titled ``Best Execution and
Executing Brokers,'' clarifies that an ETP Holder's duty to provide
best execution in any transaction ``for or with a customer of another
broker-dealer'' does not apply in instances when another broker-dealer
is simply executing a customer order against the ETP Holder's quote or,
stated in another manner, the duty to provide best execution to
customer orders received from other broker-dealers arises only when an
order is routed from the broker-dealer to the ETP Holder for the
purpose of order handling and execution. As proposed Supplementary
Material .02 further provides, the clarification is intended to draw a
distinction between those situations in which the ETP Holder is acting
solely as the buyer or seller in connection with orders presented by a
broker-dealer against the ETP Holder's quote, as opposed to those
circumstances in which the ETP Holder is accepting order flow from
another broker-dealer for the purpose of facilitating the handling and
execution of such orders. Except for conforming changes to reflect the
Exchange's membership, proposed Supplementary Material .02 is based on
the third full paragraph of Nasdaq PHLX Rule General 9, Section 11(f)
and Supplementary Material .02 of NYSE Rule 5310 without change.
Finally, Supplementary Material .03, titled ``Customer Instructions
Regarding Order Handling,'' would specify that if an ETP Holder
receives an unsolicited instruction from a customer to route that
customer's order to a particular market for execution, the ETP Holder
is not required to make a best execution determination beyond the
customer's specific instruction. However, ETP Holders are still
required to process that customer's order promptly and in accordance
with the terms of the order. Further, where a customer has directed
that an order be routed to another specific broker-dealer that is also
an ETP Holder, the receiving broker-dealer to which the order was
directed would be required to meet the requirements of proposed Rule
11.5310 with respect to its handling of the order. Except for
conforming changes to reflect the Exchange's membership, proposed
[[Page 35760]]
Supplementary Material .03 is based on Supplementary Material .03 of
NYSE Rule 5310 without change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest. In addition, the Exchange
believes that the proposed rule change is consistent with the Section
6(b)(5) \11\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that adopting best execution
and interpositioning standards based on Nasdaq PHLX Rule General 9,
Section 11 and NYSE Rule 5310 will promote just and equitable
principles of trade and protect investors and the public interest by
imposing consistent order execution standards that ETP Holders and
Associated Persons must observe when handling customer orders that
directly serve investor protection. Moreover, the Exchange believes
that incorporating the proposed Supplementary Material containing
additional guidance and clarification of the obligations of ETP Holders
and their associated persons under the proposed Rule based on Nasdaq
PHLX Rule General 9, Section 11 and NYSE Rule 5310, including the
additional provision containing important clarifications about the
interaction between a broker-dealer's best execution obligations and
their obligations with respect to specific customer instructions will
potentially enhance compliance with those obligations, thus furthering
the prevention of manipulative acts and practices and the protection of
investors and the public interest.
As discussed in the Purpose section, proposed Rule 11.5310 is
substantially similar to Nasdaq PHLX Rule General 9, Section 11 and
NYSE Rule 5310, thus promoting the application of consistent regulatory
standards for customer order execution across self-regulatory
organizations. As such, the proposed rule change would facilitate rule
harmonization among self-regulatory organizations with respect to
customer order execution, thereby fostering cooperation and
coordination with persons engaged in facilitating transactions in
securities and will remove impediments to and perfect the mechanism of
a free and open market and a national market system. In addition, the
Exchange believes that the proposed rule change will maintain the
necessary protection of customer orders designed to prevent fraudulent
and manipulative acts, without imposing any undue regulatory costs on
industry participants. Finally, the Exchange believes that the proposed
rule change is not designed to permit unfair discrimination between
customers, issuers, brokers and dealers, consistent with Section
6(b)(5) of the Act \12\ because the proposed rule change will impose
the same requirements on all ETP Holders and Associated Persons on an
equal basis.
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\12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change will reduce the burdens on ETP Holders and
Associated Persons that result from their having to comply with varying
rules related to best execution, thus reducing the complexity of
customer order protection rules, particularly for those ETP Holders and
Associated Persons subject to the rules of multiple trading venues.
Overall, the Exchange believes the proposed rule change will enhance
customer order handling rules by harmonizing best execution and
interpositioning standards across self-regulatory organizations, which
ultimately benefits market participants and does not impose a burden on
competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii)
thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#1765627b723a74787a7a727963645764727439707861"><span class="__cf_email__" data-cfemail="245651484109474b4949414a5057645741470a434b52">[email protected]</span></a>. Please include
file number SR-NYSENAT-2026-16 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSENAT-2026-16. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer
[[Page 35761]]
to file number SR-NYSENAT-2026-16 and should be submitted on or before
July 6, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-11803 Filed 6-11-26; 8:45 am]
BILLING CODE 8011-01-P
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