Mar. 31, 2023
To whom it may concern, I am writing to comment on File No. S7-32-22 and Release No. 34-96496 regarding Regulation Best Execution. As an individual investor, I believe that best execution is crucial to ensuring that investors receive fair and efficient trade execution. However, I am concerned that the current rules and regulations around best execution are not clear enough, and that there are conflicts of interest that need to be addressed. Firstly, I believe that the SEC should increase transparency in the routing of orders by brokers and wholesalers. Investors should have access to the best priced quotations available in the NMS to reduce conflicts of interest. I also believe that brokers should 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, but this needs to become a rule that the SEC can enforce. Conflicted orders should not be part of a Best Execution rule, as they can lead to customers paying higher transaction prices without knowing about revenue arrangements between brokers and subpar trading firms. Different trading venues may offer different prices, slower execution can lead to missed opportunities, information leaks can inhibit a successful transaction, and less reliable settlement processes can delay receipt of proceeds. It is important to note that without the best execution rule, customers may not be aware of these issues. The recent cases of Robinhood, Citadel, and brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers demonstrate the need for clear rules and regulations around best execution. Quarterly reviews of execution quality would provide transparency and accountability for the broker-dealers' practices. Therefore, I believe that 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. Thank you for considering my comments. Sincerely, -- Thanks, Zach Woodward