The Regulation Best Interest is a new rule proposed by the SEC which requires stockbrokers to disclose any conflicts of interest via a “new relationship summary” form. This regulation also bans any contests between brokers and dealers that offer sales-based rewards.
This rule was proposed by the SEC over a year ago and was finally approved in a 3 to 1 vote earlier this month. Initially, this regulation was opposed by investor advocates who stated that broker innovation and drive may be stifled by the confinement. However, supporters from the broker and dealer side expect the regulation to improve the current process and standards of the industry.
SEC Chairman, Jay Clayton, stated that previous regulations for this industry were not strict enough to protect investors. He also noted that the new rule should not affect innovation in this space. “You do a good job managing money, you should get paid,”, he explained.