Mar. 31, 2023
Dear Sir/Madam, I certainly support the proposed rule because of the following. It is crucial for individual investors to have access to best execution, as they may not have the necessary knowledge and expertise to make informed trade execution decisions. Retail investors need clear and understandable guidance on how to interpret Regulation NMS Rule 605 reports to ensure they are receiving best execution. While brokers already have a duty of best execution based on common law agency principles and fiduciary obligations, making it a rule enforceable by the SEC is necessary. Best execution cannot be achieved when there are conflicted orders involved. Without the best execution rule, customers may not be aware of revenue arrangements between brokers and subpar trading firms, which can result in higher transaction prices. Different trading venues can offer different prices, and slow execution and information leaks can lead to missed opportunities and delays in receiving proceeds. Robinhood's failure to fulfill its best execution obligation and resulting aggregate loss of $34.1 million for its customers in December 2020 demonstrates the importance of best execution in protecting investors. Robinhood's non-disclosure of payments received for routing trades to specific firms constitutes a violation of best execution. 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. Brokers who recommend mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have faced best execution charges from the SEC, highlighting the need for transparency in such practices. Regular reviews of execution quality would increase transparency and accountability for broker-dealers' best execution practices. The proposed Regulation Best Execution standard would result in consistently robust best execution practices, protecting household investors and promoting fair and efficient markets. Kindly yours, Konstantin Kobanenko