Mar. 20, 2023
Hi There, I am submitting my comments below for your review. I thank you for taking the time to consider the below points. For individual investors, best execution is important in trade execution. Many of us may not understand the complexities involved in choosing how to execute a trade, but best execution can help with that. Please provide clear and concise guidance on how to read and interpret the data in regulation NMS Rule 605 reports, as many household investors may not have a deep understanding of the markets and this can alleviate the difficulty they are facing. Brokers owe their customers a duty of Best Execution derived from common law agency principles and fiduciary obligations, but it needs to become a rule with teeth that the SEC can enforce adequately. Conflicted orders do not belong in a Best Execution rule. Without the best execution rule, customers may not be aware of revenue arrangements between brokers and subpar trading firms or be aware that they may be paying higher transaction prices. Different trading venues may offer different prices and slower execution can lead to missed opportunities. Information leaks can inhibit a successful transaction and less reliable settlement processes can delay the receipt of proceeds. In Dec 2020, the SEC charged Robinhood with failure to satisfy its best execution obligation, resulting in an aggregate loss of $34.1 million for its customers. Robinhood also made misleading statements and did not disclose payments they received for routing trades to specific firms. In 2017, Citadel paid $22.6 million to the SEC to settle best execution charges for executing customer trades at less favourable pricing when better prices were available. Brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have also been charged by the SEC with best execution charges. Quarterly reviews of execution quality provides transparency and accountability for broker-dealers' practices. The proposed rule would set a more detailed and comprehensive standard for broker-dealers to follow. This would result in consistently robust best execution practices. The proposed regulation Best Execution is a very much necessary step in protecting household investors and encouraging fair and efficient markets by ensuring household investors receive the best possible execution for their trades. Many household investors are likely reaching out to you and making similar comments to the ones I have outlined above. It is because they ring true. We household investors desperately want to see our markets become truly free and fair for all. That only works with your patience, dedication and hard work. I implore you to take what we are all saying very seriously as it is shaping our perspective of the fairness of our markets moving forward as we become more involved in our markets. I thank you for your time and just a reminder that entities like Citadel and Robinhood are manipulative, deceitful and seek to destroy the transparency and fairness of our markets. Do not let them speak for Household Investors. We place our hope in the SEC to ensure our dream of fairness in the markets comes to fruition. With your help we can make it a reality. -- Matthew J. McMahon