Mar. 24, 2023
Enforcement of legal requirements matters, so I support this rule that mandates the more transparent disclosure of Market Maker (Citadel) practices in order to prevent deception. We must expose any unethical behavior and prevent them from taking advantage of the market. Best execution is important in trade execution for individual investors who may not understand the complexities involved. Brokers owe their customers a duty of Best Execution derived from common law agency principles and fiduciary obligations, but they are not doing it voluntarily. It's clear that this requirement must become a rule that the SEC can enforce. Without the best execution rule, customers may not be aware of revenue arrangements between brokers and subpar trading firms or that they may be paying higher transaction prices. When I discovered the following I was horrified. We must do better: In December 2020, Robinhood was charged by the SEC with failure to satisfy its best execution obligation, resulting in an aggregate loss of $34.1 million for its customers. Robinhood made misleading statements and did not disclose payments received for routing trades to specific firms. Citadel paid the SEC $22.6 million in 2017 to settle best execution charges for executing customer trades at less favorable pricing when a better price was available. Brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have also faced best execution charges from the SEC.