Mar. 23, 2023
Good afternoon, 15 U.S.C. 78k-1 (“section 11A”) states that "It is in the public interest and appropriate 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." For too long the Commission has not allowed for fair competition due to off-exchange trading and front-running from wholesalers and large firms. In addition, monopolies do not serve the greater good, and there is clear monopolistic behaviour here. The Commission 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 just two firms. Those figures will be even higher for specific stocks. The state of American markets is clearly anti-competitive and that needs to change. After watching the markets for the last few years, it is evident that supply and demand is nonexistent. Furthermore, the current market is obviously not fair and this proposed rule is an important step in that direction. Fair competition is incredibly important and it’s good to see the SEC prioritizing true competition. However, the exemptions that have been proposed seem to align with the status-quo of not protecting household investors. If exemptions are made for market makers, such as Citadel and Virtu, the rules will assuredly be abused and large firms will gladly pay a fine for their illegal activity. This is because it is just the cost of doing business for these hedge funds and market makers. The SEC needs to abolish the exemptions to allow for competition and fair and orderly markets. I would gladly pay more for my order if I knew it was going to the lit exchange and not to a wholesaler. Addressing and correcting these problems is actually quite simple. Imposing larger fines and incorporating prison time for fraudulent activity (which should already be done) would help to quell the rampant illegal activity in our markets. The fines must claw back every single dollar that these firms have made by defrauding the public and then some for good penalty measure. Their license should also be revoked for a period of time. Multiple infractions should lead to a permanent ban from market participation. This would serve the greater good for markets. In conclusion, enforcement is really the only thing that will save these fraudulent markets. The rules can be in place but if the SEC or important governing bodies, such as the DOJ, do not enforce them and bring criminals to justice then no change will occur. I’m very excited that the SEC has proposed these rules but always remain cautiously optimistic due to the organizations track record of not protecting household investors. Sincerely, T. Wilson Household investor. PS: Sorry for the formatting.