Mar. 31, 2023
To whom it may concern, A rule is only as good as the enforcement backing it. Any fines need to be significant enough to act as deterrent, rather than so insignificant that they can be considered a "cost of doing business". In some instances it should be seen fit that broker-dealers should lose their licenses, in place of receiving fines that aren't reflective of the the ill-gotten gains obtained through so called, “honest mistakes”. I am in full support of the rule, and want to see it implemented with immediate effect. Brokers routing orders to a wholesaler, who then puts them to the auction, which could route it back to the wholesaler, is unnecessarily complex. This also grants the wholesaler a profound advantage against other market participants, giving the wholesaler access to order information well ahead of anyone else. This unfair and unbalanced information advantage should be addressed by the commission, having brokers first route to the auction, specifying where the order should go in the event of an unsuccessful auction, giving all market participants an equal advantage. Current ruling forces dark pools (Alternative Trading Systems) to provide quotes and trades to consolidated market data if they wish to operate as an auction. I fully support any rule changes that bring more transparency to dark markets. The investing public should be entitled to access information about how markets operate. 15 U.S.C. 78k-1 (“section 11A”) states that "It is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure... fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets." For too long the Commission has not be enforcing fair competition, especially within the off-exchange systems that currently dominate, and it is good to see they are beginning to take their mandate more seriously. Monopolistic behavior is not indicative of a fair and healthy market. The Commission notes that 90% of marketable orders of individual investors in National Market System (NMS) stocks are routed to a small group of six off-exchange dealers, and 66% of those are captured by just two firms. Those figures are likely higher still for specific stocks. The current state of markets is quite clearly weighted against competition, and significant changes need to be made to rectify this. The proposed rule is an important step in that direction. There are clearly participants benefitting from the fragmentation and over-complication of markets, and a dominant position in the marketplace, paying for order flow, or securing it via other nefarious means. It is good to see the Commission realise that orders should compete in lit markets, as they should. Markets should be made more simple, more transparent, and promote a free market structure as is proposed in this rule. As an individual investor, I would be prepared to pay more per share, and commission, if it meant avoiding being routed through a wholesaler with a substantial record of flouting the law, like Citadel Securities, and being charged over 70 times by the United States government. (https://files.brokercheck.finra.org/firm/firm_116797.pdf.) The parties involved have very clear and obvious conflicts of interest. Fir example; Citadel is a large source of funding for many broker-dealers and is the NYSE's biggest customer. As a wholesaler, they exercise extreme influence on other market participants and give great cause for concern that their influence will effect the ability of other participants to objectively review these rules. As an additional note, research heavily suggests that internalization is bad for markets. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4070056 I regard middlemen that simply exist to get their cut of a transaction that would otherwise occur without their input, with great disdain. This money could be better placed in any number of places, instead of further growing the coffers of corrupt Wall Street billionaires. The data clearly demonstrate that wholesalers are taking billions from individuals and institutions and calling it "superior performance". They might massage their numbers to protect their profits, but we know better. Without their involvement, the savings can go to citizens and pensions, instead of Wall Steet's overstuffed pockets. It is clear that removing profiteering middlemen from the market will improve share prices for both individuals and institutions (e.g. pension funds). Recent research by Hittal Mittesh suggests that on top of the Commission's estimate that auctions would save individuals from billions of dollars taken by wholesalers, it would also save institutions over $1.5 billion each year. Wholesalers are taking from citizens and people's pensions. Something that needs to stop. Citation: https://4982966.fs1.hubspotusercontent-na1.net/hubfs/4982966/BestEx%20Research%20Order%20Competition%20Rule%20Analysis%2020230105.pdf Regards, J.P.Butler