Mar. 12, 2023
Dear SEC Commissioners, I am writing to express my support for rule S7-31-22 with one major exception. The rule still allows orders to be routed first to Citadel before entering the auction for fair competition. This gives Citadel and other similar entities an unfair information advantage that must be removed. I appreciate and support any efforts to reduce speed games that damage the integrity, credibility, and functioning of American markets. I believe that every rule the SEC passes is only as good as the enforcement that backs it. Therefore, I urge the SEC to implement this rule as soon as possible and to impose higher fines that serve as a significant deterrent against any violators. Additionally, I believe that some broker-dealers should lose their licenses instead of receiving fines that amount to nothing more than the cost of doing business. I am also in favor of reducing inducements and eliminating the ‘farming’ of individuals’ orders for rebate money. However, the proposed rule needs to be revised to ensure that brokers route orders to the auction first and specify where the order should go if the auction is unsuccessful. This will eliminate the unfair information advantage granted to market participants such as Citadel and ensure that the entire market has equal knowledge. I support the changes that bring more transparency to dark markets, and the investing public should have easy access to what is happening within the markets. I appreciate the efforts to create fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets, as mandated by 15 U.S.C. 78k-1 (“section 11A”). The monopolistic behavior in the market is clear, as 90% of marketable orders of individual investors in NMS stocks are routed to six off-exchange dealers, and 66% of these are captured by just two firms. This state of American markets is anti-competitive and must change. I support the proposed rule as it is an important step in the direction of creating a fair and competitive market. I am also concerned about the conflicts of interest that exist between Citadel and other wholesalers, as well as the influence they exercise on other market participants. Citadel's funding of many broker-dealers and its position as the NYSE's biggest customer create clear conflicts of interest. Additionally, research suggests that internalization is bad for markets, and wholesalers are lying about the quality of their services to maintain their profits. I prefer a more simple, transparent, and free market structure, as the current fragmentation of the markets only benefits large, dominant players. Removing the profiteering middlemen from the market will improve prices for both individuals and institutions, such as pension funds. The data clearly demonstrate that wholesalers are taking billions from individuals and institutions and calling it "superior performance". I would gladly pay more per share to avoid being routed through a wholesaler, especially one with a long record of flouting the law like Citadel Securities. In conclusion, I strongly urge the SEC to revise the proposed rule to eliminate the unfair information advantage granted to market participants such as Citadel. The proposed changes will ensure a fair and competitive market that benefits all market participants, and I fully support it. Sincerely, Alberto Depentor Alberto Depentor Product Support Engineer