Mar. 19, 2023
March 19, 2023 Investors have called for increased transparency in the routing of orders by brokers and wholesalers in order to reduce conflicts of interest. The SEC should require brokers and wholesalers to provide investors with access to the best priced quotations available in the NMS, and ATS should submit detailed disclosures about their operations, including how they manage conflicts of interest, operate their order routing practices, and handle customer orders. ATS should establish and enforce written policies and procedures to prevent fraudulent and manipulative practices, and provide detailed information about the operation of their systems to the SEC. Furthermore, ATS should operate in a manner consistent with the broader regulatory structure of the securities markets, and implement a variable minimum pricing increment model for both quoting and trading of NMS stocks to promote fair and transparent pricing across trading venues. The proposal to implement a variable minimum pricing increment model for both quoting and trading of NMS stocks would promote fair pricing across trading venues and is essential for ensuring a level playing field for all investors. Investors also support any initiatives aimed at identifying and preventing fraudulent practices that undermine the credibility, integrity, and functionality of American markets. They believe sending orders to a wholesaler for internalisation should not be the only option available to investors and a cap should be implemented to prevent high commissions or fees in lieu of PFOF. Estimated savings for retail investors range from $1.12 billion to $2.35 billion, primarily through increased competition to supply liquidity to marketable orders. Competition in the marketplace is necessary to regulate markets better, and barriers to competition, such as the conflicted nature of PFOF, should be removed. Investors believe that the SEC should prioritize creating a competitive market structure that benefits investors and encourages transparency. The proposed changes to ATS rules would promote better alignment with regulatory frameworks for exchanges and would be beneficial for individual household investors. ATS should also provide detailed information about their operation to improve the SEC's ability to oversee ATS and ensure compliance with regulatory requirements.