Mar. 15, 2023
March 15, 2023
The re-proposed rule now contains exceptions to the rule that reintroduces the very behavior the rule seeks to prohibit under the guise of bona fide market making. The legal definition of bona fide is to act without intent to deceive this exception has shown historically as a shield not for bona fide liquidity making, but suppression of price discovery through dark pool trading, pfof and other conflicted mechanisms.
The ruling fails to establish to actual conditions that would comprise bona fide market making in a way that prevents this exception for being using for self-serving ways. There can be no superclass in market participants, granting a participant the ability to tilt the market in their favor under the guise of market making without actual SEC enforcement of market makers.
Until the SEC shows they can effectively discern between market making and market manipulation, no exemptions should be entertained for the sake of market fairness and market functions. Rather than creating exemptions for this, perhaps we should let the market decide and have people who offer securities for profit not also be the operator of the market that these are offered on? Is it not reasonable to define a market maker as someone who doesnt have securitized offers of their own to prevent these conflicts of interest versus granting yet another exception that results in market makers abusing their position.
If not market makers, who exactly is their rule for? This re-proposed amendment makes a specific exemption for the very action that has been determined by multiple violations to be the main actor this rule seeks to restrain from using that position to benefit themselves through conflicted offering.