Apr. 01, 2023
Dear Securities and Exchange Commission, I am writing to express my support for the proposed rule change on the Disclosure of Order Execution Information, as outlined in File No. S7-29-22 and Release No. 34-96493. As an individual investor, I understand the importance of best execution in trade execution. However, I also recognize the complexities involved in choosing how to execute a trade, which may not be apparent to all investors. Therefore, providing clear guidance on how to read and interpret the data in Regulation NMS Rule 605 reports is essential, especially for retail investors who may not have a deep understanding of the markets. I believe that brokers owe their customers a duty of best execution derived from common law agency principles and fiduciary obligations, but it needs to become a rule that the SEC can enforce. Conflicted orders should not be included in a best execution rule, and without this rule, 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, and slower execution can lead to missed opportunities. Information leaks can inhibit a successful transaction, and less reliable settlement processes can delay receipt of proceeds. Therefore, I support the proposed regulation, which would provide a more detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices. In recent years, we have seen examples of brokers failing to satisfy their best execution obligation, resulting in significant losses for their customers. For instance, 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 paid the SEC $22.6 million in 2017 to settle best execution charges for executing customer trades at less favorable pricing when a better price was available. Brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have also faced best execution charges from the SEC. Therefore, I believe that quarterly reviews of execution quality would provide transparency and accountability for the broker-dealers' practices. 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 considering my views on this important matter. Sincerely, Luis J. Gomez