Mar. 12, 2023
Dear Sirs,
The enforcement of SEC rules is crucial for their effectiveness, and imposing higher fines that serve as a strong deterrent would be more effective than the current cost of doing business for broker-dealers who receive fines. I strongly support this rule and urge its prompt implementation.
Instead of receiving fines that are simply the cost of doing business, some broker-dealers should lose their licenses for their "honest mistakes" that often lead to ill-gotten gains. I wholeheartedly support any efforts to reduce the harmful practices that damage the integrity and functioning of American markets.
It is essential to reduce inducements and prevent the "farming" of individuals' orders for rebate money, as the current routing of orders to a wholesaler before being passed to the auction gives them a significant information advantage over other market participants. The Commission should address this unfair advantage by having brokers route orders directly to the auction and specify a backup if the auction is unsuccessful, thereby creating a level playing field.
I appreciate and support any efforts to increase transparency in dark markets, such as the recent rule change requiring dark pools to provide quotes and trades to consolidated market data if they operate as an auction. It is important that the investing public has easy access to information on what is happening within the markets.
Fair competition among brokers and dealers, exchange markets, and markets other than exchange markets is necessary for the protection of investors and the maintenance of fair and orderly markets, as stated in 15 U.S.C. 78k-1 ("section 11A"). The Commission should prioritize fair competition, particularly within the off-exchange systems that currently dominate, to ensure a level playing field for all market participants.
The current state of the American markets is anti-competitive, with a small group of six off-exchange dealers capturing 90% of marketable orders of individual investors in NMS stocks, and two firms alone capturing 66%. The proposed rule is an important step towards creating a fair and level playing field for all market participants, and I support the Commission's efforts to promote true competition.
Wholesalers, such as Citadel Securities, have a long record of flouting the law, and their involvement in routing orders through backroom deals raises concerns about conflicts of interest. Research suggests that internalization is harmful to markets, and wholesalers' misrepresentation of the quality of their services for profit is unethical. Eliminating these profiteering middlemen from the market would lead to savings for both individuals and institutions, including pension funds.
Kenneth Smith