[Code of Federal Regulations]
[Title 17, Volume 3]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR242.607]

[Page 577-578]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
       CHAPTER II--SECURITIES AND EXCHANGE COMMISSION (CONTINUED)
 
PART 242_REGULATIONS M, SHO, ATS, AC, AND NMS AND CUSTOMER MARGIN 
REQUIREMENTS FOR SECURITY FUTURES--Table of Contents
 
Sec.  242.607  Customer account statements.

    (a) No broker or dealer acting as agent for a customer may effect 
any transaction in, induce or attempt to induce the purchase or sale of, 
or direct orders for purchase or sale of, any NMS stock or a security 
authorized for quotation on an automated inter-dealer quotation system 
that has the characteristics set forth in section 17B of the Act (15 
U.S.C. 78q-2), unless such broker or dealer informs such customer, in 
writing, upon opening a new account and on an annual basis thereafter, 
of the following:
    (1) The broker's or dealer's policies regarding receipt of payment 
for order

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flow from any broker or dealer, national securities exchange, national 
securities association, or exchange member to which it routes customers' 
orders for execution, including a statement as to whether any payment 
for order flow is received for routing customer orders and a detailed 
description of the nature of the compensation received; and
    (2) The broker's or dealer's policies for determining where to route 
customer orders that are the subject of payment for order flow absent 
specific instructions from customers, including a description of the 
extent to which orders can be executed at prices superior to the 
national best bid and national best offer.
    (b) Exemptions. The Commission, upon request or upon its own motion, 
may exempt by rule or by order, any broker or dealer or any class of 
brokers or dealers, security or class of securities from the 
requirements of paragraph (a) of this section with respect to any 
transaction or class of transactions, either unconditionally or on 
specified terms and conditions, if the Commission determines that such 
exemption is consistent with the pubic interest and the protection of 
investors.