FINRA’s Ketchum Says that Best Execution Analysis Should Review Multiple Venues (
FINRA Chairman and CEO Rick Ketchum warned the industry about FINRA’s “heightened attention” to best execution in corporate bonds in a recent speech. Mr. Ketchum admonished firms that failed to “exercise reasonable diligence to determine the best market” for customers. He said that policies and procedures must “supervise all debt securities execution pricing determinations.” He described FINRA cases where firms were unable to demonstrate “that they took reasonable steps to determine the prevailing market for a security, particularly with regard to the number of markets checked.”
OUR TAKE: Mr. Ketchum raises the bar on best execution analysis to specifically include a review of multiple market venues. The SEC has been hinting at such requirements for the past couple of years, especially with regard to best execution reviews by fund boards.