Mar. 31, 2023
Dear Commissioners and Staff of the Securities and Exchange Commission, I am writing to comment on the proposed Order Competition Rule (File No. S7-31-22; Release No. 34-96495). As an international investor in the US stock market, I strongly believe that the implementation of the Order Competition Rule will promote fair competition and protect investors' interests. Below are my thoughts on various aspects related to the subject. Support for the new rule: I endorse the rule mandating that orders should first go to a public auction, ensuring equal opportunities for all market participants, including pension funds. Citadel should not be the first to receive orders as it promotes an uneven playing field. Payment for Order Flow (PFOF): The UK has effectively banned PFOF due to conflict-of-interest concerns. Similar measures should be implemented in the US to maintain market integrity and protect investors. Superior execution quality: Brokers who do not accept any PFOF have demonstrated superior execution quality, as their order-routing practices are not influenced by monetary incentives. Lack of price improvement: Studies show that Robinhood does not provide significant price improvement despite PFOF accounting for approximately 70% of its revenue. Best Execution guidance: Retail investors who do not engage with PFOF receive better prices than those who do, violating FINRA's Best Execution guidance. FINRA's impact evaluation: The findings of FINRA's assessment of the effects of commission-free trading on order-routing practices should be made public to maintain transparency. Dark pools transparency: Alternative Trading Systems (dark pools) should provide quotes and trades to consolidated market data, bringing more transparency to dark markets. Unfair information advantage: The Commission should address the information advantage of wholesalers by having brokers first route to the auction and specifying where the order should go if the auction is unsuccessful. Anti-competitive markets: The current state of American markets is anti-competitive. The Commission must ensure fair competition, particularly within off-exchange systems that dominate the market. Conflicts of interest: Wholesalers wield considerable influence on other market participants, leading to potential conflicts of interest that might affect the objective review of rules. Wholesalers' false claims: Wholesalers extract billions from individuals and institutions under the guise of "superior performance" while misrepresenting the quality of their services to maintain profits. Removing middlemen: Eliminating middlemen from the market will improve prices for individuals and institutions, such as pension funds. Auctions would save billions of dollars that wholesalers currently capture. Fair competition: The Commission should ensure fair competition by reducing monopolistic behavior and removing profiteering middlemen from the market. Dark market transparency: The proposed rule to increase transparency in dark markets should be implemented promptly. Investigating conflicts of interest: The SEC should investigate conflicts of interest among market participants to ensure that they can objectively review rules. Enforcement improvements: SEC rule enforcement needs to be strengthened, with higher fines