Mar. 12, 2023
March 12, 2023 Hello SEC SROs writ large, Thank you for the opportunity to comment and be counted in my opinion as a retail investor. I support S7-31-22, The Order Competition Rule, and hope it will be implemented following the comment period without delay, with the caveat that Market Makers shall be required to forward all retail / household order to a lit exchange for public auction before any consideration of internalization be made for orders below block trades. I appreciate and support all regulatory efforts to create actual price discovery via requiring retail order flow into lit exchanges. IF this rule reduces the 'efficiency' of high frequency trading and payments for order flow, then what is really being lost? The answer being 1.5 Billion from the pockets of the retail traders for one. Profits on the side of wholesalers can surely absorb this - Citadel claims they've made the most profits ever in 2022, returning 7 Billion to their investors - a hedge fund annual record (despite restricting annual withdrawal limits). Even if such a rule induces an exit from wholesaling retail trades, again, what is lost here? My brokers can forward trades onto the public auction without the additional middleman. I would prefer this. The wholesale market is currently preventing or otherwise perverting order competition and clearly artificially affecting security prices on our exchanges. The trend shows that fleecing the retail sector in derivatives markets and dumping share prices happens in spite of bullish purchasing. This is particularly insulting when certain tickers are geared towards pump and dump schemes by allowing or restricting order flow to the public auction. Wholesalers often work without real transparency to chill bullish trends and subvert tickers with high on balance long volume towards lower pricing, often in spite of positive fundamental company analysis. The practices of spoofing, routing 70% + retail orders in any given day to internalized wholesale pools, and reducing tick size to 4 decimals or more creates an environment where regulations are difficult to check on insider trading schemes or coordinated functions aimed at forcing a security price into a max pain range. These practices damage the integrity, credibility, and reliable function of American markets. The fact that this rule seeks to put standards on internalization is supported by myself and man other retail traders. I deeply appreciate Rule 606 and support the effort in this proposed rule to shed light on inducements. The farming of retail orders for rebate money is a known cost to a few, I believe the choice to forwarding trades to the lit exchange is taken away in exchange for a saving a very minor fee per trade. Why not provide the retail investor the clear option to pay a fee for their trade vs \"free trading\"? The 'fee-less' model obscures that our real 'fee' is the production of insider data and trend information, total internalization of small (less than block order) trades, and the fractional inducements paid to brokers. I'm happy the Commission is finally addressing this unfair information advantage and these obvious conflicts of interest. I support brokers first routing to the auction at a competitive tick size (no less than xx.01 for shares trading above $1 and 0.1 cent for penny stocks). I support knowing that orders shall be cancelled at the end of day if an auction is unsuccessful. Currently, trades that are bought at a cost basis may not be settled at this cost basis or only credited as IOUs in a brokerage account, only going to trade during the settlement period or even later. Infinite liquidity is the antithesis of a market based on supply and demand - how can we achieve knowing where each share is going if there is no transparency and reduced settlement times on trades? The entire market should have equal knowledge of the lit exchanges and as an investor, I know that difficult to trade or borrow shares are truly competitive if they don't settle because they can't be located or secured. The current rule forces Alternative Trading Systems to provide quotes and trades to consolidated market data IF they wish to operate as an auction. I fully support and appreciate rule changes like this that bring transparency to the dark trading model. 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.\" This is a breath of fresh air and I support this consideration fully. When 90% of marketable orders of individual investors in NMS stocks to a small group of six off-exchange dealers, and 66% is captured by just two firms that are allowed to also trade as profiteering hedge funds, I support making these functions more like a fully regulated utility. Any profitable practice that is anti-competitive when part of the necessary market plumbing needs to be overseen and capped on their profit points or otherwise broken up as a monopolistic market function. Systemic corruption is the only reason this type of trading exists, from my perspective. I applaud measures that S7-31-22 will bring. A transparent market structure like the one proposed in this rule will truly provide retail order the weight they have to swing at the time the orders are traded, instead of holding off trades until convenient for manipulated narrative and price tinkering. I would gladly pay brokers commission to avoid being routed through a wholesaler. Both Citadel and Virtu have a long record of paying fines to avoid discovery on their actions or ever fully admit malicious intent against companies and retail orders. It is clear to me that providing a bypass and/or better oversight of wholesaler middlemen in the market will improve prices for both individuals and institutions (e.g. pension funds). Wholesalers are profiteering off of systemically critical pension plans that most American rely upon for retirement or a backstop against tragedy. Where 'child' orders are not sent to the lit markets, pensions can be loaded with toxic assets without their management knowing the assets have been targeted or knowingly part of a pump and dump scheme. Thank you for all your work and regulatory actions, Mr. Justin Daniel Household Retail Investor