Mar. 19, 2023
Dear Sir/Madam, I am writing to express my support for File No. S7-31-22; Release No. 34-96495: Order Competition Rule. I believe this new rule is a significant step towards promoting fair competition within the off-exchange systems that currently dominate the American markets. In particular, I am pleased to see the provision that Citadel cannot be the first to receive orders. Instead, orders must go to a public auction where everyone, including pension funds, has an equal opportunity to fill the order. I believe this will go a long way in promoting transparency and fair competition. Furthermore, I agree that Payment for Order Flow (PFOF) should be banned in US markets, as it has been in the UK, due to conflict-of-interest concerns. Brokers who do not accept any kind of PFOF have been shown to route orders differently and consequently see superior execution quality. A recent study found that Robinhood does not provide statistically significant price improvement relative to exchanges, despite PFOF being responsible for around 70% of its revenue. Retail investors not dealing with PFOF also get a better price than those dealing with it, violating FINRA's Best Execution guidance. I also support the evaluation of the impact of not charging commissions on member firms' order-routing practices and decisions, and the findings should be made public. TD Ameritrade's order routing decisions don't seem to be motivated by competition despite what they state on their website, and they pay to get the first look at orders, routing them to firms that net themselves billions of dollars in the process. Furthermore, I believe that dark pools (Alternative Trading Systems) should provide quotes and trades to consolidated market data to bring more transparency to dark markets. The Commission should also address the unfair information advantage of wholesalers by having brokers first route to the auction and specify where the order should go if the auction is unsuccessful. Wholesalers exercise extreme influence on other market participants, and there are conflicts of interest that may infect the ability of some participants to objectively review the rules. Wholesalers are taking billions from individuals and institutions and calling it "superior performance" while lying about the quality of their services to maintain their profits. Removing middlemen from the market will improve prices for both individuals and institutions, such as pension funds. The auctions would save individuals billions of dollars taken by wholesalers. Therefore, I urge the Commission to ensure fair competition by reducing monopolistic behaviour and removing profiteering middlemen from the market. I also believe that the proposed rule to bring more transparency to dark markets should be implemented as soon as possible. The SEC should investigate conflicts of interest among market participants to ensure that participants can objectively review the rules. Enforcement of SEC rules needs to be improved with higher fines to serve as a significant deterrent for breaking the law. Some broker-dealers should lose their licenses instead of receiving fines that amount to a cost of doing business. In conclusion, I support the Order Competition Rule and urge the Commission to take further steps to ensure fair competition in the American markets. Thank you for your attention. Sincerely, Wessel Jaegers