Dec. 27, 2022
December 27, 2022 RE: File Number S7-31-22: This proposed rule File No: S7-31-22 is to improve order competition and would largely bring an end to internalization and wholesaling in their current forms, though it would not eliminate them entirely. The proposal suggests that from now on, when a retail broker receives an order, it must be sent to an auction facility (which may be on-exchange or off-exchange, though the requirements for operating an off-exchange facility are stringent) unless it is executed at the midpoint. This allows any interested party to bid on the order. If the auction is unsuccessful, the order can then be filled by an internalizer. The proposed changes to order competition would significantly alter the way internalization and wholesaling currently operate, although they would not completely eliminate them. Under the new proposal, when a retail broker receives an order, it must be sent to an auction facility (which can be on-exchange or off-exchange, but the requirements for operating an off-exchange facility are very strict) unless it is executed at the midpoint. This allows any interested party to bid on the order. If the auction is unsuccessful, the order can then be filled by an internalizer. The auction approach is still an improvement on the current system. It is important for the community to know that their trades contribute to the NBBO and are executed on-exchange, and this proposal would help achieve that goal. Sincerely, Lukas Boller Engineer, Retail Investor