FINRA regulatory notice seeks input on best execution update
FINRA Regulatory Notice 26-15, issued July 24, 2026, asked how Rule 5310 best execution guidance should change if Reg NMS trade-through rules are rescinded.
The news: FINRA released Regulatory Notice 26-15 on July 24, 2026, requesting comment on modernizing its best execution guidance under Rule 5310. Comments were due September 25, 2026. The FINRA regulatory notice ties the review to the SEC’s proposed rescission of the Regulation NMS trade-through rule (Rule 611) and the locked and crossed market provisions (Rule 610(e)).
Why it matters: Much of today’s best execution practice assumes protected quotations and the national best bid and offer (NBBO) as the benchmark. If trade-through protection goes away, firms need new reference points for judging whether they obtained the most favorable terms reasonably available for customers. FINRA said the principles-based standard “remains appropriately calibrated,” but the interpretive guidance needs updating.
Topics on the table:
- Regular and rigorous review: Whether order-by-order review should continue for internalized orders, and how to treat smart order routers with embedded logic
- Benchmarks: Whether the NBBO should remain the measure or alternatives such as time-weighted or volume-weighted average price fit certain orders better
- Institutional orders: Which execution quality factors institutional customers prioritize compared with retail
- Extended hours: How to apply best execution when overnight sessions bring lower liquidity, higher volatility and wider spreads
- Listed options: Guidance tailored to exchange-only, auction-based options trading
- New technology: Best execution when firms use AI or trade tokenized securities
Questions for commenters include: how venue connectivity decisions should work without trade-through requirements, which access fees and costs to include in pricing analysis, whether safe harbors should exist for directed orders, documented methods or large trades meeting benchmarks, and how firms assess odd lots, OTC equities and overnight trades without an NBBO.
The big picture: This is an early-stage request, not a rule proposal. But it signals that FINRA expects market structure to shift and wants its guidance ready when it does. The breadth of topics, from overnight equity trading to tokenized securities, shows how far trading has moved since the guidance was last comprehensively revisited.
What’s next: Watch the SEC’s action on its Regulation NMS proposal, which will shape how far FINRA’s revisions go, and any follow-up notice proposing specific guidance or safe harbors.
Prepared with AI assistance from public sources and reviewed under our editorial policy. Not investment advice.
