SEC RULE 606 ORDER DISCLOSURE

The U.S. Securities and Exchange’s Rule 606 (“Rule 606”) requires broker-dealers, such as Cantor Fitzgerald (“CF&Co.”) that route customer orders in equity and option securities, to make publicly available quarterly reports that, among other things, identify the market centers to which customer orders are routed for execution.

Section (a)(1) of Rule 606 provides information on the routing of  “non-directed orders” — any order that the customers has not specifically instructed to be routed to a particular venue or market center for execution. The Rule 606 Report (the “Report”) presents the order routing information by calendar month and is divided into three sections:

– Section 1 – National Market System (“NMS”) stock orders in securities included in the S&P 500 Index;

– Section 2 – NMS stock orders in securities that are not included in the S&P 500 Index; and

– Section 3 – NMS securities that are exchange–listed options.

Each section of the Report includes information concerning certain market centers to which CF&Co. has routed orders, sets forth the percentage of various types of non-directed orders routed to these market centers (e.g., market, marketable limit, non-marketable limit, other), and discusses the material aspects of CF&Co.’s relationship with these market centers. Material aspects of the relationship include a description of the terms of any payment for order flow and any profit-sharing arrangements that may influence a broker-dealer’s order routing decision.

Section (b)(1) of SEC Rule 606 requires CF&Co. to disclose to its customers, upon request, for held orders in NMS stocks and orders in NMS securities that are option contracts, the identity of the venue to which the customer’s orders were routed for execution in the six months prior to the request, whether the orders were directed orders or non-directed orders, and the time of the transactions, if any, that resulted from such orders

In addition, the Firm shall, pursuant to Rule 606(b)(3) provide customers upon request, an individualized report concerning how CF&Co. handed that customer’s not held orders in NMS stocks for the prior six months. This report will be divided into separate sections for a customer’s directed orders and non-directed orders, in conformance with the “XML schema” published on the SEC website and is required to be produced within seven business days of the customer’s request. Clients may request a report generated pursuant to SEC Rule 606(b)(3) by contacting CF&Co.

DASH and WEX route CF&Co. option orders to various Options Exchanges as CF&Co. orders are not exposed to either  WEX or Dash’s execution/market making affiliates/entities.   As a result of this workflow, DASH and WEX are not considered “consolidators” (as orders are not sent to them “for execution”), thus CF&Co. denotes the downstream venues on the SEC Rule 606(a)(1) report. 

CF&Co. receives and handles all option orders on a “Not Held” basis.  CF&Co. does not base options order routing decisions on the receipt of payment for order flow or any other order routing inducements. CF&Co. effectively manages this potential conflict of interest by adhering to CF&CO. ’s duty to achieve best execution. In addition, CF&CO. provides customer disclosures regarding its payment for order flow practices, and makes order routing determinations wholly independently from any rebates or similar payments that CF&Co. may receive. For further information regarding CF&CO. ’s best execution practices, please see CF&CO. ’s disclosures  which can be found here https://www.cantor.com/disclosures/

CF&Co. does not have in place any incentives for equaling or exceeding an agreed upon order flow volume threshold, such as additional payments or a higher rate of payment; nor does CF&CO.  have in place any disincentives for failing to meet an agreed upon minimum order flow threshold, such as lower payments or the requirement to pay a fee. CF&CO.  does not have in place a volume-based tiered payment schedules; nor does CF&CO.  have any agreements in place regarding the minimum amount of order flow that the CF&CO.  will send to a venue. In addition CF&Co does not participate in a profit sharing type of relationship with WEX or DASH.