Oct. 19, 2023
I'm sending my comment letter to the SEC, in favor of the proposal. Rule Proposal No. 34-98766; File No. S7-18-23 Volume-Based Exchange Transaction Pricing for NMS Stocks SEC Regulators Secretary U.S. Securities and Exchange Commission To SEC Regulators: I am writing to wholeheartedly endorse the Securities and Exchange Commission’s Proposed Rule 6b-1, which aims to bring transformative changes to the market by prohibiting volume-based transaction pricing for certain types of stock orders on national securities exchanges. Market Fairness and Equal Opportunity This proposed rule could be a watershed moment in the effort to restore market fairness and ensure equal opportunities for all market participants. As a retail investor, I have often felt disadvantaged by the disproportionate benefits that volume-based pricing affords to institutional traders. Addressing SEC Questions: Impact on Member Competition: Volume-based pricing exacerbates inequality by creating a self-perpetuating cycle of advantage for high-volume traders at the expense of retail investors and small trading entities. Impact on Exchange and ATS Competition: The pricing model can obfuscate the genuine merits of trading platforms, making them appear attractive based purely on financial incentives rather than service quality or innovation. Efficiency and Transparency in the Market The current tiered pricing models not only add unnecessary complexity but also create a smokescreen that disguises the actual costs of trading, thereby undermining market efficiency. Addressing SEC Questions: Member Response to Pricing Changes: I believe the frequent adaptations to meet volume requirements contribute to market inefficiency and, at times, can compromise the quality of trade executions. Comparison to Other Compensation Models: Unlike a flat fee structure, which is straightforward and universally applicable, volume-based pricing can encourage artificial and potentially manipulative trading activities to meet volume thresholds. Market Stability and Public Trust The rule is not merely a technical adjustment; it's a necessary step to restore public trust by removing the potential for volatile, volume-driven market behavior. Advanced Transparency Measures Transparency is the bedrock of market integrity. The proposed rule’s disclosure requirements are an excellent initiative to enhance market transparency. Addressing SEC Questions: Granularity in Disclosures: More detailed disclosures would empower retail investors, market analysts, and regulatory bodies to better understand and evaluate market dynamics. Public Availability of Disclosures: Transparency can only be effective if it's accessible. Posting these disclosures on both the SEC's and the exchanges' websites would ensure maximum accessibility. Proprietary Trading Information: While pursuing transparency, the Commission must be cautious not to inadvertently disclose sensitive proprietary trading information. An aggregated or anonymized presentation of data could strike the right balance. Final Remarks and Additional Considerations Alternatives to Prohibition: The direct prohibition of volume-based pricing stands as the most straightforward solution to the problems at hand. Exchange Agreements: If confidential agreements between exchanges and members exist, they must be disclosed and scrutinized to ensure they don't compromise the principles of fairness and transparency. Conclusion I firmly believe that Proposed Rule 6b-1 is not just a regulatory action but a cornerstone for a fairer, more efficient, and more resilient financial market system. I urge the Commission to adopt this rule post-haste and commend your continued efforts to uphold the highest standards of market integrity. Thank you for considering my detailed comments on this critically important issue. I look forward to observing the positive societal impact that the adoption of this rule will undoubtedly bring. Sincerely, Glen Crawley