Mar. 22, 2023
In the state that things are now, the profits obtained from illegal actions in the market GROSSLY outweigh the fines applied, they do not scale, and they DO NOT function as an effective deterrent against illegal or unfair practice. SEC rules are only as effective as the enforcement that backs them, and if the enforcement isn't effective, they functionally may as well not exist and the SEC as a regulatory organ then looses its purpose. I think some broker-dealers should loose their licenses swiftly instead of receiving fines that amount to nothing but a cost of doing unjust, sham business, a cost that is often outweighed by the profits from what are so called "honest mistakes" by the culprits, that are in reality ill-gained. I think the investigations for applying the punishment should also be done as fast and deeply as possible, because in the state that things are now simple uneffective fines take years or decades to happen and come into effect. I fully support the rule and it should be implemented as soon as possible. I deeply support any efforts to reduce or eliminate speed competition or games that damage the credibility, integrity, and most importantly functioning of American markets. I also deeply support any efforts to reduce or eliminate inducements and "farming" of individuals' orders for rebate money. A broker routing orders first to a wholesaler, who then passes them to an auction, which might route it back to the wholesaler, seems unecessarily complex and frankly rigged as to grant the wholesaler a profound information advantage against the rest of market participants: they see orders before anyone else and can do anything with the information. The Comission must address this unfair information advantage by having brokers first route to the auction and SPECIFY where the order should go if the auction is unsuccesful. That way the market as a whole has equal knowledge, equal trading grounds and it aids the credibility of the American market. The current rule forces dark pools (Alternative Trading Systems) to provide quotes and trades to consolidated market data IF they wish to operate as an auction. I fully support rules like this and any others that bring more transparency to dark markets. The entire public should have easy access to all information pertaining to what is happening in the markets, else it becomes a biased, monopolized one (like the state it is now). And about monopolization: COMPETITION AND DESCENTRALIZATION IS GOOD. 15 U.S.C. 78k-1 (SECTION 11A) states that "It is in the public interest and appropiate for the protection of investors and the maintenance of fair and orderly markets to assure ... fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets" the Comission has not been enforcing fair competition for too long already, especially within off-exchange markets and systems that currently dominate the American market. It's good to see that the SEC is finally taking their role seriously. Monopolies are bad (they control or attempt to control the market in which they do business, meaning they lack competition: competition that is vital for the healthy functioning of the whole markets and economic system of the U.S.A), and there is clear monopolistic behavior here. The Comission notes that 90% of marketable orders of individual investors in NMS stocks to a small group of six off-exchange dealers, and 66% is captured by only TWO FIRMS. Those figures are even higher in some specific stocks. The state of the American market is very clearly anti-competitive and if it still wants to exist and not collapse, its status needs to change. The current market is very obviously unfair and this proposed rule is an important step in fixing that. Fair competition is inmensely important and the proposed rule gives the SEC some needed credibility by prioritizing true competition. Theres clearly a small percentage of individuals in the market hugely benefitting from a dominant, anti-competitive position in the marketplace. They pay for order flow and secure it through backroom deals. Orders do not compete in a lit market and they obviously must - and its good to see that the Comission finally realized this. Fragmentation of the markets overcomplicates things in a way that favours monopolization and a small group of dominant players. I prefer a simple, free and transparent market structure such as the one proposed by this new rule. WHOLESALERS ARE BAD I am up to pay a higher price per share in exchange for my order to not be routed through a wholesaler that has been charged OVER SEVENTY TIMES by the United States Government. ( https://files.brokercheck.finra.org/firm/firm_116797.pdf ) I would gladly pay a sensible comission price in order to avoid being routed to a wholesaler, especially one with a lengthy track of mocking the law like Citadel Securities. The parties involved have a very clear conflict of interest. Citadel is a large source of funding for many broker-dealers and is, for example, the NYSE's largest customer. Wholesalers exercise extreme influence over other market participants (monopoly) and I am deeply and justifiably concerned that influence and conflict of interest will infect the ability of some participants in the SEC to objectively and fairly review these rules. Research heavily suggests that internalization ks bad for all markets https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4070056 Wholesalers blatantly lie about the quality of the services that they provide to maintain profits and that is not only disgusting, but unethical. "For example, Comission analysts of CAT data in infra table 20, found that on average 51% of the shares from individual investor marketable orders internalized by wholesalers are executed at prices less favorable than the NBBO midpoint. Out of these individual investors shares that were executed at prices less favourable than the midpoint, on average, 75% of these shares could have hypothetically executed on a better price against the non-displayed liquidity resting at the NBBO midpoint on exchanges and NMS stock ATSs" -credit to r/dlauer, an individual investor's research in reddit. I dislike middlemen that simply exist just to get a cut from nothing but a transaction that can simply occur without their intrusion. I would prefer that cut to go to pension funds instead of wall street billionaires. The first clearly needs them more. Data clearly demonstrates that wholesalers are taking BILLIONS from individuals and institutions and calling it "superior performance". That is ridiculous and should not be a case that exists. They might massage the numbers to protect their profits, but me and I am sure the SEC know better. If they weren't around to take their fat cuts, the funds would go to pension funds that much need the money instead to the oversized and overstuffed pockets of Wall Street dominant players. It is clear to me as an individual investor how removing the profiteering middlemen from the market will improve market performance and profits for both individuals and institutions. Recent research by Hittal Mitesh suggests that on top of the Comission's estimate that the auctions would save individuals from billions of dollars taken by wholesalers, it would also save institutions over $1.5 BILLION each year. Wholesalers are unfairly taking funds from both citizens AND pensions- that must stop. Citation: https//:4982966.fs1.hubspotusercontent-na1.net/hubfs/4982966/BestEx%20Research%200rder%20Competition%20Rule%20Analysis%2020230105.pdf - Beautiful regards, an individual investor with the alias PH.