Mar. 26, 2023
Vanessa Countryman, Secretary, U.S. Securities and Exchange Commission, 100 F Street, N.E, Washington, D.C. 20549 File No. S7-29-22; Release No. 34-96493· Disclosure of Order Execution Information Dear Ms. Countryman: The proposed changes to ATS rules and the SEC's focus on increasing transparency in the routing of orders by brokers and wholesalers, align with the broader goal of promoting fair and transparent trading practices, which would ultimately benefit individual investors. By requiring ATS to submit detailed disclosures about their operations, establish written policies and procedures to prevent fraudulent practices, and provide data on the execution of orders and order routing practices, the SEC would have better oversight and could ensure compliance with regulatory requirements. Furthermore, the proposal to implement a variable minimum pricing increment model for both quoting and trading of NMS stocks would promote fair pricing across trading venues and create a level playing field for all investors, ultimately benefiting household investors. The estimated savings for retail investors, which range from $1.12 billion to $2.35 billion, primarily through increased competition to supply liquidity to marketable orders, underscore the importance of competition in regulating markets and removing barriers to competition, such as the conflicted nature of PFOF. In addition, it is essential to prioritise creating a competitive market structure that benefits investors and encourages transparency. By implementing a cap on the high commissions or fees brokers may charge in lieu of PFOF, the SEC can further reduce conflicts of interest and promote fair and transparent trading practices. Finally, the SEC should continue to identify and prevent fraudulent practices that undermine the credibility, integrity, and functionality of American markets, as such initiatives are widely supported by household investors. Overall, the proposed changes and initiatives by the SEC to increase transparency, reduce conflicts of interest, and promote fair and transparent trading practices align with the interests of household investors and are crucial for creating a competitive market structure that benefits investors and encourages transparency. Please find the following ensemble of points I would like you to consider within the implementation and enforcement of the aforementioned rule. The SEC should reduce conflicts of interest by increasing transparency in the routing of orders by brokers and wholesalers, with investors having access to the best priced quotations available in the NMS. The proposed changes to ATS rules promote better alignment with regulatory frameworks for exchanges would be beneficial for individual household investors. ATS (Alternative Trading Systems) should submit detailed disclosures about their operations, including how they manage conflicts of interest, how they operate their order routing practices, and how they handle customer orders. This would make it easier for investors to understand how ATS operate and how their orders are executed. ATS should establish and enforce written policies and procedures to prevent fraudulent and manipulative practices. This would help to protect individual investors from abusive practices in the ATS market. ATS should provide detailed information about the operation of their systems to the SEC, including data on the execution of orders, order routing practices, and information about the use of dark pools. This would improve the SEC's ability to oversee ATS and ensure compliance with regulatory requirements. ATS should operate in a manner that is consistent with the broader regulatory structure of the securities markets, which would benefit individual investors by promoting fair and transparent trading practices. ATS implement a variable minimum pricing increment model for both quoting and trading of NMS stocks which would further promote fair and transparent pricing across trading venues, ultimately benefiting investors. The proposal to implement a variable minimum pricing increment model for both quoting and trading of NMS stocks would promote fair pricing across trading venues, which is essential for ensuring a level playing field for all investors. Household investors support any initiatives aimed at identifying and preventing fraudulent practices that undermine the credibility, integrity, and functionality of American markets. Sending orders to a wholesaler for internalisation should not be the only option available to investors. Brokers may charge high commissions or fees in lieu of PFOF, so a cap should be implemented. Estimated savings for retail investors range from $1.12 billion to $2.35 billion, primarily through increased competition to supply liquidity to marketable orders. Competition in the marketplace is necessary to regulate markets better and barriers to competition, such as the conflicted nature of PFOF, should be removed. The SEC should prioritise creating a competitive market structure that benefits investors and encourages transparency. Thank you for your consideration. Household Investor.