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SEC Warns Brokers on Dark Duties

Traders Magazine, April 2008

Nina Mehta

The Securities and Exchange Commission warned brokers they must ensure they're meeting their best-execution obligations by accessing both displayed and non-displayed liquidity for clients. This reminder comes in light of buyside concern over the fragmentation of non-displayed liquidity. Erik Sirri, director of the SEC's Division of Trading and Markets, said in February, "We look to brokers in general to solve the problem of fragmentation...on behalf of customers." Sirri informed brokers that "blindly following routing strategies that may have worked in the past but no longer fit the current market structure is not an appropriate best-execution approach."

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