Mar. 20, 2023
From: Matt McMahon Sent: Monday, March 20, 2023 8:15:28 AM (UTC-05:00) Eastern Time (US & Canada) To: Rule-Comments Subject: File No. S7-31-22 Release No. 34-96495: Order Competition Rule Hi There, Some of the points below you may be already hearing from other household investors, however they all ring true. I hope you take the points below into consideration as they have considerable value into shaping our markets to be more fair for us all. I would like to express my support for the new rule that states orders must go to a public auction where everyone, including pension funds have an equal opportunity to fill the order. This allows for everyone to have a fair chance and takes away an unfair advantage held by Citadel. PFOF has been banned in the UK due to conflict of interest concerns - this should be the case for the US markets too. Brokers who do not accept any kind of PFOF route orders differently and consequently see superior execution quality. Robinhood was recently found to not provide any meaningful price improvement relative to exchanges despite PFOF accounting for around 70% of its revenue. Household Investors not dealing with PFOF get a better price than those dealing with it, violating FINRA's best execution guidance. FINRA is evaluating the impact of not charging commissions on member firms' order-routing practices and decisions and those findings should be made available to the general public for transparency. TD Ameritrade's order routing decisions are not motivated by competition despite their website claims, and they pay to get the first look at orders, routing them to firms that net themselves billions of dollars in the process. Dark Pools (Alternative trading systems) should provide quotes and trades to consolidated market data to make dark markets more transparent to the public. Additionally, the commission should address the unfair information advantage of wholesalers by having brokers first route to the auction and then specify where the order should go in the event the auction is unsuccessful. Currently, the American markets find themselves in a state of anti-competitiveness. Fair competition is essential to a free and fair market. The commission must ensure fair competition especially in off-exchange systems which currently dominate. Wholesalers put extreme pressure on other market participants and there are conflicts of interest that limit the ability of some participants to review the rules in an objective fashion. Wholesalers are taking billions from individuals and institutions and labelling it as "superior performance" while lying about the quality of their service to greedily maintain their profits. Eliminating the middlemen from the market will improve prices for individual household investors and institutions such as pension funds. The auctions would save billions of dollars for individuals that are currently being taken by wholesalers. The commission must ensure fair competition by reducing monopolistic behaviour and removing the middlemen hellbent on profiteering from the market. The proposed rule to improve transparency to dark markets should be implemented ASAP. The SEC should also investigate conflicts of interest among market participants to ensure that participants can objectively review the rules. Fines are not enough of a deterrent for those violating the SEC rules. Enforcement needs to be improved and broker-dealers in violation of these rules and those that show questionable ethical conduct need to lose their licenses. Fines are simply viewed as the cost of doing business. I implore you to take the above points that I and many other household investors are submitting seriously. Despite many of us using similar verbiage, the message has immense merit and truth behind it. I personally typed out the words in this email to ensure it is an accurate reflection of my perspective. Thank you for your time spent reviewing my message and for working hard to make our markets free, fair and transparent. As household investors we are relying on you to protect our interests and to root out the corruption currently plaguing our markets from malicious intending entities like Citadel Securities. -- Matthew J. McMahon