Mar. 31, 2023
Vanessa A. Countryman Secretary U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 205499–1090 rule- Re: Rule Proposal No. 34-96495; File No. S7-31-22 Order Competition Rule Dear Ms Countryman, I have always been skeptical that the SEC was upholding their stated mandate to protect investors. Rules and laws are only as good as the enforcement that backs them, and it seems that paltry fines are just a cost of doing business for those abusing our markets. But I have been pleasantly surprised by the recent proposed rules and, should these rules be implemented AND enforced, we will be making progress towards a more fair, orderly, and efficient market. The proposed rule to enhance order competition (No. S7-31-22; Release No. 34-96495) is a step in the right direction by requiring orders of individual investors to be exposed to competition in fair and open public auctions. It has now been well documented in SEC reports that the vast majority of retail orders do not go to the transparent lit markets, but instead go to the dark market into pools that are not competing. Forcing these orders to public auction provides transparency to investors as to what is happening within the markets and will support true price discovery. Currently it appears the wholesalers are just middlemen who are taking a cut out of a transaction that would occur with or without them. While each of these cuts may be a tiny number this is adding up to billions of dollars that are being drained from households and hoarded by wall street. This is not good for our country and is leading to an increasing wealth gap which will have far reaching consequences. The SEC was created to help build a strong economy and it is the SEC's responsibility to take action. Per Title 15 U.S.C. 78k-1 of the U.S. legal code, it is in the SEC's mandate to "assure fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets" and to "assure an opportunity for investors' orders to be executed without the participation of a dealer." I do have one major concern with the rule as it is currently proposed. It is not clear enough to me that brokers must first route orders to the auction and then if (and only if) someone doesn't take the order should they be routed to any wholesalers. I would like to see this clearly addressed so there is no wiggle room and then see this rule implemented as soon as possible. Furthermore any market participants that are breaking your rules need swift consequences that include actual financial penalties exceeding the amount of ill-gotten gains plus criminal penalties. I understand the SEC relies on the DOJ for criminal enforcement but working closely with them to facilitate these actions are critical to stop the abuse of our financial system. Thank you for your efforts to protect our market and household investors like myself. Sincerely, Lindsey Marshall