Mar. 20, 2023
Dear SEC, I am writing to express my support for File No. S7-29-22, Release No. 34-96493, regarding Disclosure of Order Execution Information. In today's increasingly complex financial markets, best execution is a critical aspect of trade execution, particularly for individual investors who may not fully understand the intricacies involved in executing a trade. To promote transparency and clarity, the SEC should provide clear and accessible guidance on how to read and interpret the data in Regulation NMS Rule 605 reports, particularly for retail investors who may lack expertise in the markets. Brokers have a duty to provide Best Execution to their customers, based on common law agency principles and fiduciary obligations. However, it is necessary to establish a rule that the SEC can enforce, like a sheriff upholding the law in a frontier town. Conflicted orders should not be included in a Best Execution rule, as they are like oil and water that cannot mix. Without the best execution rule, customers may be unaware of revenue arrangements between brokers and subpar trading firms, or that they may be paying higher transaction prices, akin to purchasing a car that turns out to be a lemon. Different trading venues may offer varying prices, and slower execution can result in missed opportunities, like a runner tripping and falling in a race. Information leaks can obstruct a successful transaction, and less reliable settlement processes can delay receipt of proceeds, like a postal service that delivers mail too late. In December 2020, Robinhood was charged by the SEC with failure to satisfy its best execution obligation, resulting in an aggregate loss of $34.1 million for its customers. This situation is comparable to a wolf in sheep's clothing deceiving its prey. Robinhood made misleading statements and failed to disclose payments received for routing trades to specific firms, similar to a politician accepting bribes. In 2017, Citadel paid the SEC $22.6 million to settle best execution charges for executing customer trades at less favorable pricing when a better price was available, like a restaurant overcharging customers for low-quality food. Brokers recommending mutual funds with 12b-1 fees and revenue-sharing arrangements with clearing brokers have also faced best execution charges from the SEC, resembling a doctor prescribing unnecessary treatments to earn kickbacks. Quarterly reviews of execution quality would provide transparency and accountability for broker-dealers' practices, similar to a teacher grading students' homework. The proposed rule would establish a more detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices, like a chef following a recipe to create a delicious meal. The proposed Regulation Best Execution is a necessary step in protecting household investors and promoting fair and efficient markets by ensuring that household investors receive the best possible execution for their trades, similar to a shepherd safeguarding his flock from danger. Thank you for your attention to these matters. Sincerely, Anthony L