Mar. 12, 2023
Every investor should have access to the best priced quotations available in the national market system and such prices generally should be determined by competitive market forces like the order auction rule suggests. It shouldn’t be possible to pay billions of dollars for a monopoly of retail order flow in order to control the entire market by getting the biggest market share. Citadel recommended withdrawing this proposal for a number of reasons, including the unprecedented nature of requiring certain market participants to utilize a specific trading protocol. Citadel uses the orders they are getting to dominate the market and manipulate the mechanics of supply and demand in their favor. Internalizing orders suppresses real price discovery in the markets and benefits only the ones internalizing the orders. Sending all orders to an auction first has the upside of benefiting every participant, which is interested in a specific trade. Every buyer gets a better price and every seller gets a better price. The brokers could get a commission of said trade. In this case no middleman is needed, that just takes and doesn't provide anything useful. My only concern is that brokers will start charging outrageous commissions or fees in lieu of PFOF, so I’d recommend a cap on the amount of commissions or fees that the brokers are allowed to charge. I trust the Economic Analysis done by the commission and I look forward to retail saving from $1.12 billion to $2.35 billion on transaction costs. These estimated gains would be generated primarily through increased competition to supply liquidity to marketable orders of individual investors, which in turn would lower transaction costs for individual investors, potentially enhance order execution quality for institutional investors, and improve price discovery. The SEC Historical Society has a Youtube video titled Regulation and Market Structure from ATS to NMS published June 1 2018. At 35:09, Dr. Richard R. Lindsey, division director from 1995 - 1998 states “Really what you wanted was competition in the marketplace. And that competition really regulated markets much better than the SEC could. We didn't view it as our job to design the market, we viewed it as our job to try to allow more competition to exist.. To let competition exist you actually have to remove the barriers to competition that exist”. I agree with this. One barrier to competition is the conflicted nature of PFOF. Kind Regards, a concerned Investor