Oct. 29, 2023
I appreciate the opportunity to comment on the proposed amendments to the definition of "exchange" under the Securities Exchange Act of 1934. As an investor, I understand the need to modernize regulations to address gaps in oversight of electronic trading systems. However, I have several concerns about the expansive revised definition of what constitutes an “exchange” and "exchange access" requirements. First, defining an exchange as any system with "non-firm trading interest" is excessively broad and vague. This could unintentionally encompass a wide range of communication platforms and online forums that enable discussion about transactions, but do not themselves execute trades or constitute regulated exchanges. The core functions that would subject a system to exchange requirements need to be more precisely delineated. Second, the proposed "fair access" mandates and linking of access to the "public interest" rely on subjective criteria that create uncertainty for platforms and market participants. More objective, transparent standards should be established to evaluate fairness, necessity, and appropriateness of access. Third, the compliance burden of mandated access reviews, record-keeping, and reporting seems disproportionate to the potential benefits. A robust, empirical cost-benefit analysis should be conducted before finalizing these burdensome requirements. Fourth, establishing a one-size-fits-all access framework risks stifling beneficial innovation in trading technology. The Commission should consider flexible tiers or exemptions so regulations are scalable based on an electronic system's activities and risks. Finally, requiring exchange-like oversight of communication protocols blurs the line between those entities and other regulated entities like broker-dealers. Clear jurisdictional lines are needed to avoid market confusion and protect the rights of citizens to transact and speak freely. In summary, while I support judicious updates to address regulatory gaps, I am concerned the proposed definition and access requirements go too far. I urge the Commission to take a targeted approach that addresses deficiencies without hampering innovation or imposing excessive burdens. With prudent revisions, this proposal can achieve the vital goal of fairer, more efficient markets, while providing greater inclusion for all members of society to participate in open financial markets and global innovation. Thank you for considering my comments.