January 1, 2016
Dear Commission
From your website:
"SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud."
The very reason the IEX exchange application has garnered such widespread support from such a diverse group of participants is that, in our current markets, fair dealing is not being maintained and investors are not being protected against fraud.
A select group has been given a distinct advantage over all other participants - an advantage based on speed. This advantage has been developed, maintained and defended by not only the high speed trading firms but the exchanges themselves.
The whispers are getting louder and louder that the SEC itself has helped facilitate this advantage by failing to accurately monitor and measure their activity in a way that reveals the truth about what is going on. However, I'd like to believe that the SEC, our top regulatory agency and protector of fair markets for all participants, is above such collusion.
That being said, the fact that investors are essentially being taxed on every single equities transaction by high speed front running, spoofing, quote fading and phantom liquidity.
These things are not happening because they provide some great benefit to the markets (some in fact are illegal according to the SEC's own regulations), they are happening so that high speed trading firms can capture latency arbitrage profits.
Investors and traders both big and small see the above behaviors on a daily basis.
Independent Analysts, using microsecond level data repeatedly report instances of the above behavior - in real time - on virtually a daily basis.
My question to you is this: If these behaviors are widely seen and reported on by participants from every area of the investor community, why can't The Division of Trading and Markets which is reponsible for, according to your website, "day to day oversight of the major securities market participants"?
The Division of Trading and Markets also has the responsibility of "surveilling the markets".
How are they not seeing the above mentioned behaviors if in fact they are "surveilling the markets" and providing "day to day oversight of the major securities market participants" (yet many others are)?
The fact that nothing has been done about any of the dubious practices related to latency arbitrage by Trading and Markets leads us to believe one of two things: 1) Trading and Markets is protecting high speed traders by ignoring what everyone else can see as obvious or 2)They are simply not "surveilling the markets" and providing "oversight of the major securities market participants".
The investing community has had enough.
By approving the IEX exchange, the majority of market participants will be given a new, better way of executing orders.
By approving the IEX exchange, the majority of market participants will be given a venue in where they will not be preyed upon by high frequency traders who provide no benefit to the market (no matter how hard they try to convince everyone otherwise through misdirection and lobbying dollars) and simply want their risk free tax extracted from everyone else.
It is also important to note that approving the IEX exchange is a strong FIRST step. The first of three that need to be implemented.
The second being the erradication of Payment For Order Flow which fuels internalization and abuse of retail order flow.
The third being the removal of legal immunity for the exhcanges. As long as this is in place, it creates a safe haven for all of the truly illicit dealings that take place on our exchanges. I challenge you to name a single for profit company with this same immunity.
But first things first, approve the IEX exchange application as submitted.
Investors are counting on you.
Thank you.