Mar. 31, 2023
Dear Ms. Countryman: The proposed rule to increase transparency and competition in the market for NMS stocks is an important step in the right direction towards fairer markets. The rule's support for public auctions that give all participants an equal opportunity to fill orders, rather than just giving the first right to Citadel, is especially commendable. Payment for Order Flow (PFOF) has long been a controversial issue, and the proposed ban on PFOF is a necessary measure to address conflicts of interest concerns. The study's finding that Robinhood does not provide statistically significant price improvement despite PFOF being responsible for around 70% of its revenue is alarming, and reinforces the need to ban this practice. The proposed rule's focus on ensuring that broker routing decisions are motivated by competition is a welcome move. Brokers who do not accept any kind of PFOF should not be at a disadvantage, and should be able to route orders differently and see superior execution quality. The need to evaluate the impact of not charging commissions on member firms' order-routing practices and decisions is an important consideration, and the findings of this evaluation should be made public. The proposal to bring more transparency to dark markets by requiring dark pools to provide quotes and trades to consolidated market data is also a much-needed measure. Wholesalers exercise extreme influence on other market participants, and the conflicts of interest that arise from their profiteering 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 rule is a positive step towards ensuring fair competition and transparency in the market for NMS stocks. The SEC should investigate conflicts of interest among market participants to ensure that the rules are objectively reviewed, and enforcement of SEC rules needs to be improved 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 break the rules, rather than just fining them. --- Additionally, I am in full agreement with all of the following information: Support for the new rule that states that 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. Payment for Order Flow (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. FINRA is evaluating the impact of not charging commissions on member firms' order-routing practices and decisions, and the findings should be made public. 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 Commission should 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. The state of American markets is anti-competitive, and fair competition is essential. The Commission needs to ensure fair competition, especially within the off-exchange systems that currently dominate. 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 behaviour and removing profiteering middlemen from the market. The proposed rule to bring more transparency to dark markets should be implemented as soon as possible. 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 a cost of doing business. --- I have heard from the lips of these PFOF doing, self dealing, heavy conflict of interest having hedge fund managers that it is a terrible thing that young people are losing faith in our markets today and the ramifications of that... Bernie Madoff would have the same concern. To quote Donald Trump as much as I dislike the man, "that makes them smart". Young people today are more skeptical even than Gen X or Millenials, that makes them smart. This system has shown over and over again that it is corrupt, that self regulation does not work, that the SEC works for highly corrupt billionaires rather than to protect the interests or even the livelihoods of the American taxpayer. And by taxpayer I mean the average Joe who gets in a lot of trouble if he does not pay taxes, not the rich people who enjoy paying no taxes and who offshore their wealth or in today's case, offshore their synthetics and notional derivatives to escape real price discovery and FTDs. I hope the SEC will do the right thing or else young people in America may never own homes, never know freedom, never have real jobs or any sense of purpose. And we'll collectively continue to roil, detached in the fakery amid all the other issues facing our society. But I know in my bones that though lit markets bedrock is there waiting to ground us again in reality. All these dangerous easy money practices that the 1% engages with, playing irresponsible games with other people's money, in the media, in politics. Somewhere in there, this country has lost the plot. Please do the right thing. Restore young people's faith in our markets by making them factually trustworthy at all. Regards,