Mar. 12, 2023
Every rule enacted by the SEC is only as good as the enforcement that backs it up. Higher fines that actually serve as a significant deterrent are what I'm looking for. I think some 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 fully support the rule; please put it in place as soon as possible. I deeply appreciate and support any efforts 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 the "farming" of individual orders for rebate money. A broker routing orders first to a wholesaler, who then passes them to the auction, which may then route them back to the wholesaler, appears overly complex and also grants the wholesaler a significant information advantage over other market participants: they see orders well before anyone else. The Commission should address this unfair information advantage by requiring brokers to route orders first to the auction and specify where the order should go if the auction fails. As a result, the entire market has equal knowledge. The current rule requires dark pools (Alternative Trading Systems) to provide quotes and trades to consolidated market data in order to function as auctions. I fully support and appreciate rule changes that increase transparency in the dark markets. The investing public should have easy access to information about what is going on in 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 monopolistic behavior is evident here. The Commission notes that 90% of individual investors' marketable orders in NMS stocks are routed through a small group of six off-exchange dealers, with only two firms capturing 66%. Specific stocks will have even higher figures. The current state of American markets is clearly anti-competitive, and this must be changed. The current market is clearly unjust, and this proposed rule is a significant step in that direction. Fair competition is critical, and it's encouraging to see the SEC prioritize true competition. Some market participants clearly benefit from a dominant, anti-competitive position in the marketplace. They either pay for or secure order flow through backroom deals. Why are orders unable to compete in lit markets? They should, and it's encouraging to see that the Commission is finally recognizing this. Market fragmentation complicates things in a way that only benefits large, dominant players. I prefer a more straightforward, transparent, and free market structure, such as that proposed in this rule. WHOLESALERS ARE EVIL. I would gladly pay more per share to avoid being routed through a wholesaler that has been charged by the US government over 70 times (https://files.brokercheck.finra.org/firm/firm 116797.pdf). I'd gladly pay a commission to avoid going through a wholesaler, especially one with a long history of breaking the law like Citadel Securities. The parties involved clearly have competing interests. Citadel is a major source of funding for many brokers and is the NYSE's largest customer. Wholesalers wield enormous power over other market participants, and I am concerned that this power will impair some participants' ability to review these rules objectively. Internalization appears to be detrimental to markets, according to research. https://papers.ssrn.com/sol3/papers.cfm?abstract id=4070056 I dislike middlemen who exist solely to take a cut of a transaction that would otherwise take place. I'd rather see the money go to pension funds than to Wall Street billionaires. The data clearly demonstrate that wholesalers are taking billions from individuals and institutions and calling it "superior performance". They may manipulate their figures to protect their profits, but we know better. If they weren't there to take their cut, the savings would go to citizens and pensions rather than Wall Street's overflowing pockets. It is obvious to me that removing profiteering middlemen from the market will raise prices for both individuals and institutions (e.g. pension funds). According to recent research by Hittal Mittesh, in addition to the Commission's estimate that the auctions would save individuals billions of dollars taken by wholesalers, it would also save institutions over $1.5 billion per year. Wholesalers are stealing from citizens as well as people's pensions, and this must stop. Cite this page as: https://4982966.fs1.hubspotusercontent-na1.net/hubfs/4982966/BestEx%20Research%20Order%20Competition%20Rule%20Analysis%2020230105.pdf Thank you, Jacob Heuvelmans