Mar. 31, 2023
Dear SEC, I would like to express my support for the new rule that requires public auctions for all orders, instead of allowing Citadel to be the first to receive orders. This will provide equal opportunities for all, including pension funds. I also agree with the ban on Payment for Order Flow (PFOF), as it creates a conflict of interest and has been banned in the UK. Brokers who do not accept any PFOF route orders differently often 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. Furthermore, 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. 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. They 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. It is important to ensure fair competition by reducing monopolistic behavior and removing profiteering middlemen from the market. The proposed rule to bring more transparency to dark markets should be implemented as soon as possible. Finally, the SEC should investigate conflicts of interest among market participants to ensure that participants can objectively review the rules. 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 the cost of doing business. Thank you for considering my thoughts. Sincerely, Luis Dias