To require the Securities and Exchange Commission to carry out a study on payment for order flow, to require the Investor Advocate of the Commission to provide recommendations on payment for order flow, and for other purposes.

To require the Securities and Exchange Commission to carry out a study on payment for order flow, to require the Investor Advocate of the Commission to provide recommendations on payment for order flow, and for other purposes. 1. Short title This Act may be cited as the To be added Act of 2021 2. Studies and reports (a) In general The Securities and Exchange Commission shall carry out a study on payment for order flow received by brokerage firms for routing customer orders to market centers, including wholesale brokerages, alternative trading systems, internalizers, and exchanges, including— (1) payment for order flow arrangements; (2) conflicts arising from these payment arrangements; (3) the extent to which execution prices for brokerage firm customers are reflective of the best available market price; (4) the impact of payment for order flow arrangements on customer trade execution quality; (5) steps firms are taking to mitigate or eliminate conflicts stemming from these arrangements; (6) how brokerage firms disclose payment for order flow to customers; (7) whether customers understand the disclosures provided by brokerage firms regarding payment for order flow; (8) the disclosure requirements pursuant to Rule 606 of Regulation NMS (17 C.F.R. 242.606); (9) whether firms are adequately disclosing payment for order flow on Form CRS; (10) steps brokerage firms are taking, if any, to limit how market centers use the brokerage firms’ customer’s data; and (11) the extent to which brokers are surveying different market centers for best prices prior to routing specific customer orders. (b) Report Not later than the end of the 180-day period beginning on the date of enactment of this Act, the Commission shall issue a report to the Congress containing all findings and determinations made in carrying out the study required under subsection (a). (c) Rulemaking Not later than 18 months after the date of enactment of this Act, the Securities and Exchange Commission shall issue rules, subject to notice and comment, to revise its rules consistent with the results of such study, including, if warranted, to prohibit or limit the payment for order flow. (d) Clarification of authority The Commission may issue rules to regulate, limit, or prohibit the payment for order flow before the completion of the study required under this section, if the Commission finds such a rule is necessary or appropriate in the public interest or for the protection of investors.

Summary: This bill directs the Securities and Exchange Commission (SEC) to study and report on payment for order flow (payment received by a stock brokerage firm for directing orders to another firm that buys and sells stock). The SEC must study, among other topics, conflicts arising from these payment arrangements, the impact on trade execution quality and pricing, and how firms disclose this arrangement to customers. The SEC must revise its rules, subject to notice and comment, consistent with the results of the study.