Mar. 18, 2023
The effectiveness of the SEC's rules depends on their enforcement, and higher fines and license revocations for broker-dealers would serve as more significant deterrents. I fully support this rule and any efforts to combat market speed games, reduce inducements, and increase transparency. The complex routing of orders through wholesalers in off-exchange systems gives them an unfair information advantage and allows them to engage in monopolistic behavior. The SEC's proposed rule to ensure fair competition among brokers, dealers, and exchange markets is a step in the right direction. Internalization by wholesalers is bad for markets, and I would gladly pay more to avoid being routed through one with a history of flouting the law like Citadel Securities. Removing middlemen like wholesalers from the market would improve prices for individuals and institutions, and reduce profiteering that takes money from citizens and pension funds. The proposed rule to ensure fair competition among brokers, dealers, and exchange markets is an important step towards creating a simpler, transparent, and free market structure that benefits all participants. However, off-exchange wholesalers like Citadel Securities engage in monopolistic behavior and have a clear conflict of interest that undermines the integrity of the market. Research shows that internalization is bad for markets, and that wholesalers often misrepresent the quality of their services. Removing these middlemen from the market would save billions of dollars for individuals and institutions, and prevent them from taking money from citizens and pension funds. The proposed SEC rule aims to address issues related to market fragmentation, conflicts of interest, and anti-competitive practices that have arisen in the equity markets. The rule would require broker-dealers to route their customer orders to exchanges rather than to wholesalers or other off-exchange venues that operate as internalizers. Internalizers are market makers that execute trades within their own systems rather than routing them to an exchange. The SEC has identified concerns with internalization, including the lack of transparency and price improvement for investors, potential conflicts of interest, and the negative impact on competition. By requiring brokers to route their orders to exchanges, the SEC aims to increase transparency, improve price discovery, and promote competition. Some industry participants have opposed the rule, arguing that internalization provides price improvement for investors and that the rule could harm market quality and liquidity. However, supporters of the rule believe that the benefits of increased competition and transparency outweigh any potential drawbacks. Overall, the proposed SEC rule represents an effort to address longstanding concerns with the equity markets and to promote fair and transparent competition. Sincerely, A household investor Citation: https://4982966.fs1.hubspotusercontent-na1.net/hubfs/4982966/BestEx%20Research%20Order%20Competition%20Rule%20Analysis%2020230105.pdf