Mar. 3, 2023
March 3, 2023 I am an individual investor and against the proposed rules. The current market structure made investing free to small investors which is AMAZING if you think about it. In my interpretation the data shows that the current model made spreads narrower and trading effectively free thanks to payment for order flow. Allowing, an increased competitions among brokers as new entrants to the market are in much easier situation partnering up with a few wholesaler than building much more individual exchanges. Less hustle when starting your brokerage company and lower operating cost. The current rules make me often able to get even better price than the visible bid/ask, not to mention that limit orders, something that everyone should use are also free to enter on the current platforms. There is an even playing field, as everyone can set up a market maker company. If it would be such a lucrative business, Virtu, the main public market maker's performance would not seriously lack the performance of NASDAQ since its IPO. I don't see where is that 'enarmous amount of money' they take from the small investor. What bothers me more is that Citadel, a market maker is also able to run funds that may very much use their market making information when making their fund investment decisions. Why woudn't the SEC rather force such businesses to separate their potentially conflicting non-market making business into a separate entity? I don't think that the current system is perfect. However I think that allowing casual small investors (day) trade options, stocks on leverage, leveraged ETFs is causing way bigger financial loss to them than the current market structure which is rather provides benefits, if used wisely. Retail losing money is more of an education question (promote limit orders, less frequent trading for example. I would also limit the available tools a small, inexperienced traders. For example by increasing the day trader limit from the current 25k USD limit which inflated a lot in the past and limit the leveraged/options securities to the more sophisticated investors. From my point of view who cares if my trade is visible on a public exchange until I get a price improvement? Market makers provide a service, narrowing the spread and allowing investors to trade commission free. I am afraid the proposed rules if introduced unchanged will lead to bigger spreads, less liquidity, especially in volatile times, reintroduced trading commissions by brokers and lower participation by the small investors in the equity markets hurting investors and the economy as well. So instead of risking a lot by disturbing the world's best functioning market I would recommend to aim at the root of the problem and try to influence retail traders behavior to trade less, use limit orders and avoid leverage/options that will automatically improve their performance on the stock market instead of going backwards and making trading more expensive.