Mar. 19, 2023
To whom it may concern, I am writing to highlight the importance of best execution in trade execution, particularly for individual investors who may not fully understand the complexities involved in choosing how to execute a trade. It is crucial that the SEC provides clear guidance on how to read and interpret the data in Regulation NMS Rule 605 reports, especially for retail investors who may not have a deep understanding of the markets. Brokers owe their customers a duty of best execution, but it needs to become a rule that the SEC can enforce. Conflicted orders don't belong in a best execution rule, as customers may not be aware of revenue arrangements between brokers and subpar trading firms or that they may be paying higher transaction prices. Different trading venues may offer different prices, slower execution can lead to missed opportunities, and less reliable settlement processes can delay receipt of proceeds. 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. Citadel and brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have also faced best execution charges from the SEC. To promote transparency and accountability for the broker-dealers' practices, quarterly reviews of execution quality would be helpful. The proposed Regulation Best Execution is a necessary step in protecting household investors and promoting fair and efficient markets by ensuring that household investors are receiving the best possible execution for their trades. Thank you for your attention to this matter. Sincerely, Eric C.