Mar. 26, 2023
March 26, 2023
By Email
Vanessa A. Countryman
Secretary
Re: File No. S7-31-22; Release No. 34-96495: Order Competition Rule
Dear Ms. Countryman,
The proposed regulation aimed at promoting fairness in the market for NMS stocks is a crucial step in the right direction. Its emphasis on public auctions that provide equal opportunities to all participants, as opposed to granting the first right to Citadel, is especially commendable. Payment for Order Flow (PFOF) has been a contentious issue for some time, and the suggested ban on PFOF is a necessary measure to address potential conflicts of interest. The recent finding that Robinhood's revenue is primarily dependent on PFOF but does not provide significant price improvement is a cause for concern, highlighting the need to ban this practice.
The proposed regulation's focus on motivating brokers' routing decisions through competition is a positive development. Brokers that do not accept PFOF should not be at a disadvantage and should be able to route orders differently and obtain superior execution quality. It is essential to assess the impact of not charging commissions on member firms' order-routing practices and decisions, and the results of this evaluation should be made public.
Another essential measure proposed in the regulation is to bring more transparency to dark markets by requiring dark pools to provide quotes and trades to consolidated market data. Wholesalers exert undue influence on other market participants, and their profiteering conflicts of interest need to be addressed. Removing middlemen from the market will improve prices for both individuals and institutions and save billions of dollars taken by wholesalers.
Overall, the proposed regulation is a positive step towards ensuring fair competition and transparency in the market for NMS stocks. It is crucial that the SEC investigates conflicts of interest among market participants to ensure that the rules are objectively reviewed. Additionally, the enforcement of SEC rules should be strengthened with higher fines to serve as a significant deterrent for breaking the law. The Commission should also consider revoking licenses of broker-dealers who repeatedly violate the rules, rather than just fining them.
Sincerely,
Juan Corpus
Small Business Owner