Mar. 31, 2023
Good afternoon SEC personnel, I am writing to express my concerns about the state of American markets and the need for fair competition within the off-exchange systems that currently dominate. One issue that I strongly support is the new rule that states Citadel cannot be the first to receive orders; instead, orders must go to a public auction where everyone, including pension funds, has an equal opportunity to fill the order. This will ensure that everyone has a fair chance to fill orders and eliminate any advantage that Citadel may have had. Another issue that I would like to bring to your attention is Payment for Order Flow (PFOF). PFOF has been effectively banned in the UK due to conflict-of-interest concerns – and this should be the case in US markets too. Brokers who do not accept any kind of PFOF route orders differently and consequently see superior execution quality. A recent study found that Robinhood does not provide statistically significant price improvement relative to exchanges, despite PFOF being responsible for around 70% of its revenue. Retail investors not dealing with PFOF get a better price than those dealing with it, violating FINRA's Best Execution guidance. Therefore, it is crucial that the SEC investigates conflicts of interest among market participants to ensure that participants can objectively review the rules. Moreover, TD Ameritrade's order routing decisions don't seem to be motivated by competition despite what they state on their website, 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 bring more transparency to dark markets. The proposed rule to bring more transparency to dark markets should be implemented as soon as possible. It is also important to address the unfair information advantage of wholesalers by having brokers first route to the auction and specify where the order should go if the auction is unsuccessful. Wholesalers exercise extreme influence on other market participants, and there are conflicts of interest that may infect the ability of some participants to objectively review the rules. Wholesalers are taking billions from individuals and institutions and calling it "superior performance" while lying about the quality of their services to maintain their profits. Removing middlemen from the market will improve prices for both individuals and institutions, such as pension funds. The auctions would save individuals billions of dollars taken by wholesalers. The Commission should ensure fair competition by reducing monopolistic behavior and removing profiteering middlemen from the market. Lastly, I believe that enforcement of SEC rules needs to be improved with higher fines to serve as a significant deterrent for breaking the law. Some broker-dealers should lose their licenses instead of receiving fines that amount to a cost of doing business. FINRA is evaluating the impact of not charging commissions on member firms' order-routing practices and decisions, and the findings should be made public. The SEC should investigate conflicts of interest among market participants to ensure that participants can objectively review the rules. I hope that my concerns are taken into account, and the necessary actions are taken to ensure fair competition and transparency in American markets. Thank you for your attention. Sincerely, Kevin Cano Kevin Cano | Data Base Reporting Analyst Grow with us apply @ www.freshexpress.com/careers Fresh Express Incorporated | �� +1-4074076125057 x217 5057 | �� +1-4074072212948 PRIVATE COMMUNICATION: The information contained in this e-mail message is confidential and may be legally privileged. If you are not an intended recipient of this e-mail, be aware that any use, disclosure, publication, distribution or copying of this e-mail message or any part of its content is prohibited and may be unlawful. If you have received this e-mail message in error, please notify the sender and delete the e-mail message from your system.