Apr. 01, 2023
I am writing to express my strong support for several changes in the US securities markets that I believe are necessary to ensure fair competition and transparency. In particular, I support the recent rule proposed by the Securities and Exchange Commission (SEC) that would require public auctions for orders, rather than allowing Citadel or other wholesalers to receive orders first. As you may be aware, Payment for Order Flow (PFOF) has been effectively banned in the UK due to conflict-of-interest concerns, and I believe this should also be the case in US markets. 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. I also believe that 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. Wholesalers exercise extreme influence on other market participants, and conflicts of interest may infect some participants' ability 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. The state of American markets is anti-competitive, and fair competition is essential. The Commission needs to ensure fair competition, especially within the currently dominated off-exchange systems. 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. This rule can be highly beneficial to our markets to implement the proposed rule to bring more transparency to dark markets as soon as possible. Additionally, the Commission 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 business costs. Thank you for your time and I look forward to seeing this rule being implemented and undoing what Bernie Madoff rooted into our system by creating PFOF.