Mar. 31, 2023
Hello, I am an individual retail investor. I have been investing for a little over five years. I am writing in support of the proposed rule. Best execution is important in trade execution for individual investors who may not understand the complexities involved in choosing how to execute a trade. Brokers owe their customers a duty of Best Execution derived from common law agency principles and fiduciary responsibility obligations, but it needs to become a rule that the SEC can enforce. Conflicted orders don't 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 that they may be paying higher transaction prices. 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. Quarterly reviews of execution quality would provide greater transparency and accountability for the broker-dealers' practices. The proposed rule would provide a more detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices. The proposed Regulation Best Execution is a necessary step in the right direction and in protecting household investors, as well as, promoting fair and efficient markets by ensuring that household investors are receiving the best possible execution for their trades. Thank you for your time. Regards, Cole Blocher