Mar. 31, 2023
Hello SEC, As a concerned and interested stockholder, shareholder, and investor in the United States equity markets, I want my support for this rule to be recorded. I believe that best execution is important in trade execution for individual investors who may not understand the complexities involved in choosing how to execute a trade. This rule should provide clear guidance on how to read and interpret the data in Regulation NMS Rule 605 reports, especially for household or retail investors who may not have a deep understanding of the markets. Brokers owe their customers a duty of Best Execution derived from common law agency principles and fiduciary obligations, and that duty needs to become a rule that the SEC can enforce. Without the best execution rule, customers may not be aware of revenue arrangements between brokers and third-party trading firms or that they may be paying higher transaction prices. Different trading venues can offer different prices, slower execution can lead to missed opportunities. 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. I include the previous examples to establish that the issue addressed by this rule is widespread and well known. Quarterly reviews and public publication of execution quality would provide transparency and accountability for the broker-dealers' practices, so household and retail investors can make informed decisions when considering their brokerage options. The proposed rule would provide a more detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices. Therefore, the proposed Regulation Best Execution is a necessary step in protecting household investors and promoting fair and efficient markets by ensuring that household investors are receiving the best possible execution for their trades. At the end of the day, enforcement of new and existing rules matters more than anything else. I expect to see higher fines, bigger penalties, and actual consequences for SEC violations. Resulting fines cannot be a relatively small cost of doing business for potentially abusive counterparties, the SEC must create and enforce fair markets by having all fines be larger than profits. With urgency and high expectations, Christopher McBride