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.
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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``[To be added Act of 2021]''.

SEC. 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.
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To be added Act of 2021
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 be added Act of 2021
Rep. Sherman, Brad