Mar. 12, 2023
As an investor, I am deeply concerned about the current state of the markets and the lack of fair competition among brokers and dealers. While the SEC has passed rules to protect investors, these rules are only effective if they are properly enforced. I strongly believe that the fines imposed by the SEC should be increased to serve as a significant deterrent to broker-dealers who engage in unethical practices. I also believe that some broker-dealers should lose their licenses instead of receiving fines that amount to nothing more than a cost of doing business. I fully support the proposed rule that aims to reduce the speed games that damage the integrity, credibility, and functioning of American markets. I appreciate and support any efforts to reduce inducements and to reduce the 'farming' of individuals' orders for rebate money. I believe that a broker routing orders first to a wholesaler, who then passes them to the auction, is unnecessarily complex and grants the wholesaler a profound information advantage against other market participants. 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. This way, the entire market will have equal knowledge. I am also deeply concerned about the monopolistic behavior in the current market. The fact that 90% of marketable orders of individual investors in NMS stocks go to a small group of six off-exchange dealers, and 66% is captured by just two firms, is alarming. The state of American markets is clearly anti-competitive, and this needs to change. The proposed rule is an important step in the direction of fair competition, which is incredibly important for the integrity of the markets. I also believe that the fragmentation of the markets only benefits large, dominant players, and I prefer a more simple, transparent, and free market structure like the one proposed in this rule. Wholesalers are a clear conflict of interest, and I would gladly pay more per share or commission to avoid being routed through a wholesaler with a long record of flouting the law like Citadel Securities. They exercise extreme influence on other market participants, and I am concerned that this influence will infect the ability of some participants to objectively review these rules. Furthermore, research suggests that internalization is bad for markets, and wholesalers are lying about the quality of their services to maintain their profits. The data clearly demonstrate that wholesalers are taking billions from individuals and institutions and calling it "superior performance." I strongly believe that removing the profiteering middlemen from the market will improve prices for both individuals and institutions, including pension funds. Recent research suggests that the auctions would save individuals from billions of dollars taken by wholesalers, and it would also save institutions over $1.5 billion each year. Wholesalers are taking from citizens and people's pensions, and that needs to stop. In summary, I urge the SEC to take action to ensure fair competition among brokers and dealers and to enforce regulations effectively. I strongly support the proposed rule that aims to reduce the speed games, inducements, and 'farming' of individuals' orders. I believe that the fragmentation of the markets only benefits large, dominant players, and wholesalers are a clear conflict of interest. Removing them from the market will improve prices for both individuals and institutions, including pension funds. - Leonard Ford