For Regulation NMS purposes, “payment for order flow” uses the definition in 17 CFR § 240.10b-10: remuneration, compensation, consideration, services, property, or other benefits received by a broker or dealer in return for routing customer orders for execution, including the rule’s listed examples. Regulation NMS § 242.600 incorporates this definition by reference. Read the incorporated § 240.10b-10 definition and its scope rather than treating the phrase as an informal synonym for any execution-related payment.
ReviewedEvidence2 sourcesSectionPhrases & Idioms
Quick answer
For Regulation NMS purposes, “payment for order flow” uses the definition in 17 CFR § 240.10b-10: remuneration, compensation, consideration, services, property, or other benefits received by a broker or dealer in return for routing customer orders for execution, including the rule’s listed examples.
Key details
Canonical FormPayment for Order Flow
Core MeaningFor Regulation NMS purposes, “payment for order flow” uses the definition in 17 CFR § 240.10b-10: remuneration, compensation, consideration, services, property, or other benefits received by a broker or dealer in return for routing customer orders for execution, including the rule’s listed examples.
Further guidance
History Boundary
Regulation NMS § 242.600 incorporates this definition by reference. Read the incorporated § 240.10b-10 definition and its scope rather than treating the phrase as an informal synonym for any execution-related payment.
Meaning
For Regulation NMS purposes, “payment for order flow” uses the definition in 17 CFR § 240.10b-10: remuneration, compensation, consideration, services, property, or other benefits received by a broker or dealer in return for routing customer orders for execution, including the rule’s listed examples.
Usage Boundary
Regulation NMS § 242.600 incorporates this definition by reference. Read the incorporated § 240.10b-10 definition and its scope rather than treating the phrase as an informal synonym for any execution-related payment.
Sources and evidence
Sources are shown with the role they play in this guide. Historical or style-sensitive claims are kept within the evidence boundary described above.
Categorized by Order Size is a current Regulation NMS defined term. This guide keeps the reporting classification tied to the enumerated rule buckets rather than informal size labels.
Categorized by Order Type is a current Regulation NMS defined term. This guide preserves the rule’s specific order-type classification rather than replacing it with a simplified trading glossary.
Under current U.S. Regulation NMS, a “covered order” is a rule-defined class of market and limit orders received by a market center, broker, or dealer under the timing and quotation conditions in § 242.600, subject to stated exclusions. The definition contains timing, NBBO, execution, and special-handling conditions and exclusions; do not reduce “covered order” to every market or limit order.
Under current U.S. Regulation NMS, a “customer limit order” is an order to buy or sell an NMS stock at a specified price that is not for a broker or dealer account, and it includes an order transmitted by a broker or dealer on behalf of a customer. Keep this definition tied to NMS stock, a specified price, and the rule’s express inclusion of orders transmitted by a broker or dealer on behalf of a customer.
Under current U.S. Regulation NMS, a “customer order” is an order to buy or sell an NMS security that is not for a broker or dealer account, subject to the rule’s stated market-value exclusions. Use the § 242.600 definition for rule-scoped analysis. The definition excludes orders meeting the stated market-value thresholds, so it should not be reduced to every order placed for a non-broker/dealer account.
Under current U.S. Regulation NMS, a “directed order” is an order from a customer who specifically instructed the broker or dealer to route it to a particular venue for execution. Use the § 242.600 definition for rule-scoped analysis; the customer’s specific routing instruction is the defining feature, so do not broaden the term to every order a broker routes to a venue.
Executable Stop Marketable Limit Order is a current Regulation NMS defined term. This guide preserves the rule-specific conditions instead of replacing them with informal trading shorthand.
Executable Stop Non-Marketable Limit Order is a current Regulation NMS defined term. This guide preserves the rule-specific conditions instead of replacing them with informal trading shorthand.
