Mar. 12, 2023
To whom it may concern, There needs to be enforcement for rules passed by the SEC and higher fines that act as significant deterrents. 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. I fully support the rule and its implementation as soon as possible. I appreciate and support any efforts to reduce high-frequency trading, frontrunning and internalization that damage the integrity, credibility, and functioning of American markets. I appreciate and support any efforts done by the SEC in that sense. Wholesalers get an unfair advantage when brokers route orders to them instead of sending them to the auction. The SEC should remove this unfair advantage by having brokers route obligatorily to the auction, so that every party has equal knowledge. The current rule forces alternative trading systems, i.e. dark pools, to provide quotes and trades to consolidated market data, that is if they wish to operate as an auction. I appreciate and support rule changes that bring more transparency to dark markets. Markets should be transparent so that the public is informed appropriately on the real state of their investments. 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 there hasn't been fair competition, especially within the off-exchange systems that currently dominate orders on the market. There has to be concrete and pragmatic guidance to turn things around. The presence of monopolies in the market do in fact lead to worst executions for investors. The SEC states that 90% household investors orders in NMS stocks to only six off-exchange dealers, and 66% is handled by just two firms. Those figures are even higher for particular securities. Markets in that sense are clearly monopolistic and deter competition. That needs to change. The lack of fairness is clearly aimed at in this proposed rule, which is an important step in correcting the state of things. Fair competition is incredibly important to a just market and it’s good to see the Commission prioritizing true competition. Some market participants clearly benefit from some anti-competitive and monopolistic positions in the marketplace. Orders should compete in lit markets. There shouldn't be an option to pay for order flow through backroom deals, which creates abuses and unfairness. The SEC is doing good work for market transparency and fairness in that sense with this ruling. Fragmentation of the markets makes things overcomplicated 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. If paying more per share is the only way to avoid being routed through a wholesaler that has been charged over 70 times by the United States government, then I would happily pay the piper so as not to be taken advantage of. (Source : https://files.brokercheck.finra.org/firm/firm_116797.pdf). I do not mind paying commission to avoid being profited from by having my orders routed through a wholesaler, especially one with a long record of breaking the law like Citadel Securities. The dominant parties involved have very clear conflicts of interest. For example, Citadel is an important source of funding for many broker-dealers and is the NYSE's biggest customer. Wholesalers exercise draconian influence on other market participants and I am concerned that influence will affect the ability of some participants to objectively review these rules. Research strongly suggests that internalization is bad for markets. (Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4070056) There shouldn't be middlemen that exist for the ONLY purpose of getting their cut of a transaction that would otherwise occur without their intervention. That money should benefit pension funds instead of Wall Street billionaires. The data clearly shows that wholesalers are taking billions from individual investors and institutions and calling it "superior performance". They might cherry pick their numbers to protect their profits, but we the investors know better. If they weren't around to take their cut, the savings would go to citizens and pensions instead of into Wall Steet's overstuffed pockets. It is clear to me how removing the profiteering and useless middlemen from the market will improve prices for both individual investors and institutions (e.g. pension funds). Recent research by Hittal Mittesh 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 household investors AND people's pensions. That needs to stop right now. (Citation: https://4982966.fs1.hubspotusercontent-na1.net/hubfs/4982966/BestEx%20Research%20Order%20Competition%20Rule%20Analysis%2020230105.pdf) Thank you for your time and consideration, Joseph Perreault, Household investor in the American stock market