Dec. 17, 2023
Hello and thank you for reading this, I am reaching out as a retail Investor. I’ve have been involved with handling my own funds in the market for over 10 years now and I’d like to help voice concerns which I am aware are being a larger threat to the welcomeness of the US markets. PFOF appears to be a form of routing trades which does not promote efficiency or fairness. If the higher bidder wins the task of completing the order, then it reduces market competition. It also discourages attributes which would make our markets more competitive and efficient. PFOF would increase likelihood of conflict-of-interests to arise as well. If we allow the exchange to pay rebates to any party who sends in non-marketable orders, then this is also a form of PFOF. Small brokers pay fees that subsidize large brokers who collect rebates. These rebates increase under volume-based tier that’s provide larger rebates when brokers execute more volume. Snowball down a mountain. This will ultimately reduce competition, which leads to a higher likelihood of dampening execution quality of customer trades. Imagine that a soccer team had their worst players out in the field because they paid the management. Those players who paid to play, will not perform as well as the more capable players who now have to sit on the bench. The team will lose the game to a team which values their players on skill and execution. US markets should focus on structuring their team with the better players. Sent from my iPhone