Mar. 12, 2023
Good Afternoon, I am writing in full support of this rule and of all rules that bring an end to the greed that has driven the American economy into shambles. We need to close the loopholes that allow Wall Street agencies from being able to say "it's legal!". Hoping for human decency to reign supreme is not working. It is a shame, but one that we can no longer lament. The time for action & correction is now. You, the SEC, have a true opportunity here to regain the respect and trust of the citizens you must protect from greed and predatory financial practices. If we are unable to get this done now, I fear for all of our futures. Please take to heart the following comments and let's make this happen. Let's spawn a new age where America can truly innovate once again. Please implement this as soon as possible. Every rule the SEC passes is only as good as the enforcement that backs it. I want to see higher fines that actually serve as a significant deterrent. I think broker-dealers should lose their licenses instead of receiving fines that amount to nothing more than a cost of doing business - a cost that is often outweighed by the ill-gotten gains obtained through “honest mistakes”. I deeply appreciate and support any efforts to reduce the speed games that damages the integrity, credibility, and functioning of American markets. I deeply appreciate and support any efforts to reduce inducements and to reduce the ‘farming’ of individuals’ orders for rebate money. A broker routing orders first to a wholesaler, who then passes them to the auction, which might route it back to the wholesaler, seems unnecessarily complex and also grants the wholesaler a profound information advantage against other market participants: they get to see orders well before anyone else. The Commission should address this unfair information advantage by having brokers first route to the auction and specify where the order should go if the auction is unsuccessful. That way the entire market has equal knowledge. The current rule allows dark pools (Alternative Trading Systems) to provide quotes and trades to consolidated market data IF they wish to operate as an auction. I fully support and appreciate rule changes like this that bring more transparency to dark markets. The investing public should have easy access to what is happening within the markets. COMPETITION IS GOOD 15 U.S.C. 78k-1 (“section 11A”) states that, "It is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure ... fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets." For too long the Commission has not be enduring fair competition, especially within the off-exchange systems that currently dominate. It's good to see they are beginning to take their mandate more seriously. Monopolies are bad, and there is clear monopolistic behavior here. The Commission notes that 90% of marketable orders of individual investors in NMS stocks to a small group of six off-exchange dealers, and 66% is captured by just two firms. Those figures will be even higher for specific stocks. The state of American markets is clearly anti-competitive and this needs to change. The current market is obviously not fair and this proposed rule is an important step in that direction. Fair competition is incredibly important and it’s good to see the SEC prioritizing true competition. There are clearly some market participants benefiting from a dominant, anti-competitive position in the marketplace. They pay for order flow or secure it through backroom deals. Why can't orders compete in lit markets? They should - and it's good to see that the Commission finally realizes this. Fragmentation of the markets makes things over-complicated in a way that only benefits large, dominant players. I prefer a more simple, transparent, and free market structure like the one proposed in this rule. WHOLESALERS ARE BAD I would gladly pay more per share to avoid being routed through a wholesaler that has been charged over 70 times by the United States government: https://files.brokercheck.finra.org/firm/firm_116797.pdf I am willing to pay a commission to avoid being routed through a wholesaler, especially one with a long record of flouting the law like Citadel Securities. The parties involved have very clear conflicts of interest. Citadel is a large source of funding for many broker-dealers and is, for example, the NYSE's biggest customer. Wholesalers exercise extreme influence on other market participants and I am concerned that influence will affect the ability of some participants to objectively review these rules. Wholesalers are lying about the quality of their services to maintain their profits and millions of people are paying for it. For example, Commission analysis of CAT data in infra Table 20 found that, on average, 51% of the shares of individual investor marketable orders internalized by wholesalers are executed at prices less favorable than the NBBO midpoint. Out of these individual investors shares that were executed at prices less favorable than the midpoint, on average, 75% of these shares could have hypothetically executed at a better price against the non-displayed liquidity resting at the NBBO midpoint on exchanges and NMS Stock ATSs. The data clearly demonstrate that wholesalers are taking billions from individuals and institutions and calling it "superior performance". They might massage their numbers to protect their profits, but we know better. We need to remove these middlemen. This money should/needs to go to pension funds for those hardworking Americans who keep our country running. It is clear to me how removing the profiteering middlemen from the market will improve prices for both individuals and institutions (e.g. pension funds). Recent research by Hitesh Mittal suggests that on top of the Commission's estimate that the auctions would save individuals from billions of dollars taken by wholesalers, it would also save institutions over $1.5 billion each year. Wholesalers are taking from citizens AND people's pensions - this needs to stop. Citation: https://4982966.fs1.hubspotusercontent-na1.net/hubfs/4982966/BestEx%20Research%20Order%20Competition%20Rule%20Analysis%2020230105.pdf I appreciate your time in reading my comments. I look forward to the passing of this rule and more to come that will ensure a fair market for all and bring about the end to the pillaging of funds from people who are not yet aware of what has been happening. With respect, Scott Albanese San Diego, CA