How does the SEC define "brokerage and research services"?

The SEC defines "brokerage and research services" as encompassing activities that are necessary for the execution of transactions as well as the related research that informs those transactions. This definition highlights that brokerage services are not limited to simply executing trades but also include the analytical and informational support that aids investment decision-making. Essentially, it reflects the interconnected nature of conducting trades and the research that provides the necessary context and understanding for those trades.

This definition underscores the legitimacy and value of comprehensive service offerings in the brokerage industry. It acknowledges that effective transaction execution relies on market insights and analytical support, integrating both execution capabilities and research services. Thus, the combination of these elements enriches the overall investment process, aligning with the SEC's regulatory framework that aims to ensure transparency and informed decision-making in the financial markets.