Mar. 31, 2023
Dear Chairman Gensler, I am writing in support of File No. S7-29-22; Release No. 34-96493· Disclosure of Order Execution Information. I believe that 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. Best execution is critical in trade execution for individual investors who may not understand the complexities involved in choosing how to execute a trade. Providing 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, would be extremely beneficial. 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 do not belong in a Best-Execution rule, and without it, 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 the receipt of proceeds. In recent years, some brokers have failed to satisfy their best execution obligation, leading to customer losses. For example, 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 paid the SEC $22.6 million in 2017 to settle best execution charges for executing customer trades at less favourable 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 the best execution charges from the SEC. Quarterly reviews of execution quality would provide transparency and accountability for the broker-dealers' practices. The proposed rule would provide a more detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices. In conclusion, I urge the SEC to support File No. S7-29-22; Release No. 34-96493· Disclosure of Order Execution Information. The proposed Regulation Best Execution is critical to protect household investors and promote fair and efficient markets by ensuring that household investors are receiving the best possible execution for their trades. Thank you for your consideration. Sincerely, Mr David Daumas