Mar. 19, 2023
Dear Securities and Exchange Commission, I am writing to express my concern regarding the disclosure of order execution information by brokerage firms. Specifically, I am concerned about the so-called "price improvement" utilized by Citadel and Viru to attract order flow by claiming to offer the best trades in the market. While their performance statistics seem to support this claim, there is a suspicion that they selectively apply the price improvement to benefit themselves. This practice can lead to deceptive practices and unethical behavior in the market. Therefore, I believe that the new rules proposed by the SEC should enforce legal requirements that should have already been in place and mandate more transparent disclosure of their practices to prevent deception. As you are aware, best execution is essential in trade execution for individual investors who may not understand the complexities involved in choosing how to execute a trade. Therefore, it is crucial to provide clear guidance on how to read and interpret the data in Regulation NMS Rule 605 reports, especially for retail investors who may not have a deep understanding of the markets. Furthermore, brokers owe their customers a duty of Best Execution derived from common law agency principles and fiduciary obligations. Still, it needs to become a rule that the SEC can enforce to prevent any conflict of interest or unethical practices. It is important to note that without the best execution rule, customers may not be aware of revenue arrangements between brokers and subpar trading firms, resulting in paying higher transaction prices. Also, different trading venues may offer different prices, slower execution can lead to missed opportunities, and less reliable settlement processes can delay receipt of proceeds. In light of these concerns, I believe that the proposed Regulation Best Execution is a necessary step in protecting household investors and promoting fair and efficient markets. This rule would provide a more detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices. Therefore, I urge the SEC to mandate quarterly reviews of execution quality to provide transparency and accountability for the broker-dealers' practices. This will help expose any unethical behavior and prevent them from taking advantage of the market. Thank you for considering my concerns. Sincerely, Dylan McGrath