Mar. 31, 2023
By Email Vanessa A. Countryman Secretary U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 205499–1090 rule-comments@sec.gov RE: File No. S7-29-22; Release No. 34-96493· Disclosure of Order Execution Information Ms. Countryman: Thank you for the opportunity to provide public comment. As a household investor, I am very concerned about the state of the current markets. This includes the amount of data that is hidden within the current system, professional entities front running household investor trades, the repeated delay in the release of swap data, the repeal of previous regulations brought about by system failures, the failure of enforcement of existing rules and regulations, failures of self-regulating entities to comply with rules and regulations, waiving of margin requirements at will solely for the benefit of professionals, the trading restrictions placed on household investors by professional entities due to their failure to hedge risk, the ability of professionals to continue trading during halts on securities, spoofing trades to affect the security price and bid/ask spread, the failure of household investor purchases to affect price discovery, the internalization of household security purchases, the failure of household investors to obtain the best price for their securities, the conflict of interest of professional entities used to bend markets to their benefit, ability to continuously fail to deliver sold securities, failure of the system to force deliveries or reverse trades, failure to settle trades in a timely manner give the current state of technology, the use of algorithms to enact high frequency trading strategies, central clearing of trades by an extension of large bank entities, beneficial ownership by household investors where voting rights are not guaranteed, a system where votes are reduced to match the official released security numbers regardless of the quantity of actual securities sold, unaudited central clearing houses; professional entities claiming to represent household investors in an effort to receive favorable regulations; just to name a few. This proposed rule begins to address some of the above listed concerns. Best execution is important in trade execution for individual household investors who may not understand the complexities involved in choosing how to execute a trade. The commission shall provide clear guidance on how to read and interpret the data in Regulation NMS Rule 605 reports, especially for household 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, but this obligation needs to become a rule that the Commission 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. 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. In December 2020, Robinhood was charged by the Commission 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 Commission $22.6 million in 2017 to settle best execution charges for executing customer trades at less favorable pricing when a better price was available. It is unacceptable that this practice was implemented, allowed, and it is highly likely that this fine, was not equivalent to the profit made during this period. Rule and regulation violations should be assigned fine amounts that will serve as a significant deterrent for breaking the law. The perpetrator should not be able to make any profit for improper operation. Furthermore, repeat offenders should lose their licenses instead of receiving fines that amount to a cost of doing business. Offenders should be made to admit fault, return profits, and should not be eligible to start new businesses in the financial sector. Brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have also faced best execution charges from the Commission. Quarterly reviews of execution quality would provide the minimum amount of acceptable 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 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 your consideration. Sincerely, A Concerned US Citizen ------- Original Message ------- On Friday, March 31st, 2023 By Email Vanessa A. Countryman Secretary U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 205499–1090 rule-comments@sec.gov RE: File No. S7-32-22; Release No. 34-96496· Regulation Best Execution Ms. Countryman: Thank you for the opportunity to provide public comment. As a household investor, I am very concerned about the state of the current markets. This includes the amount of data that is hidden within the current system, professional entities front running household investor trades, the repeated delay in the release of swap data, the repeal of previous regulations brought about by system failures, the failure of enforcement of existing rules and regulations, failures of self-regulating entities to comply with rules and regulations, waiving of margin requirements at will solely for the benefit of professionals, the trading restrictions placed on household investors by professional entities due to their failure to hedge risk, the ability of professionals to continue trading during halts on securities, spoofing trades to affect the security price and bid/ask spread, the failure of household investor purchases to affect price discovery, the internalization of household security purchases, the failure of household investors to obtain the best price for their securities, the conflict of interest of professional entities used to bend markets to their benefit, ability to continuously fail to deliver sold securities, failure of the system to force deliveries or reverse trades, failure to settle trades in a timely manner give the current state of technology, the use of algorithms to enact high frequency trading strategies, central clearing of trades by an extension of large bank entities, beneficial ownership by household investors where voting rights are not guaranteed, a system where votes are reduced to match the official released security numbers regardless of the quantity of actual securities sold, unaudited central clearing houses; professional entities claiming to represent household investors in an effort to receive favorable regulations; just to name a few. This proposed rule begins to address some of the above listed concerns. The Commission 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 (ATS are SEC-regulated electronic trading platforms that match buyers and sellers of stocks) must 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. Only this would provide the necessary transparency for household investors to understand how ATS operate and how their orders are executed. ATS must establish and enforce written policies and procedures to prevent fraudulent and manipulative practices. This is necessary to protect individual investors from abusive practices in the ATS market. ATS should provide detailed information about the operation of their systems to the Commission, including data on the execution of orders, order routing practices, and information about the use of dark pools. This is necessary to improve the Commission's ability to oversee ATS and ensure compliance with regulatory requirements. ATS must operate in a manner that is consistent with the broader regulatory structure of the securities markets, which is necessary to benefit individual household investors by promoting fair and transparent trading practices. ATS must implement a variable minimum pricing increment model for both quoting and trading of NMS stocks which is necessary to further promote fair and transparent pricing across trading venues, ultimately benefiting household 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. I, as an individual household investor, 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 internalization should not be the only option available to investors. Brokers may charge high commissions or fees in lieu of PFOF, so a cap must be implemented. It is estimated that 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 prioritize creating a competitive market structure that benefits and protects household investors and encourages transparency. Sincerely, A Concerned US Citizen ------- Original Message ------- On Friday, March 31st, 2023 By Email Vanessa A. Countryman Secretary U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 205499–1090 rule-comments@sec.gov RE: File No. S7-30-22; Release No. 34-96494; Regulation NMS: Minimum Pricing Increments, Access Fees, and Transparency of Better Priced Orders Ms. Countryman: Thank you for the opportunity to provide public comment. As a household investor, I am very concerned about the state of the current markets. This includes the amount of data that is hidden within the current system, professional entities front running household investor trades, the repeated delay in the release of swap data, the repeal of previous regulations brought about by system failures, the failure of enforcement of existing rules and regulations, failures of self-regulating entities to comply with rules and regulations, waiving of margin requirements at will solely for the benefit of professionals, the trading restrictions placed on household investors by professional entities due to their failure to hedge risk, the ability of professionals to continue trading during halts on securities, spoofing trades to affect the security price and bid/ask spread, the failure of household investor purchases to affect price discovery, the internalization of household security purchases, the failure of household investors to obtain the best price for their securities, the conflict of interest of professional entities used to bend markets to their benefit, ability to continuously fail to deliver sold securities, failure of the system to force deliveries or reverse trades, failure to settle trades in a timely manner give the current state of technology, the use of algorithms to enact high frequency trading strategies, central clearing of trades by an extension of large bank entities, beneficial ownership by household investors where voting rights are not guaranteed, a system where votes are reduced to match the official released security numbers regardless of the quantity of actual securities sold, unaudited central clearing houses; professional entities claiming to represent household investors in an effort to receive favorable regulations; just to name a few. This proposed rule begins to address some of the above listed concerns. I strongly support the Commission's proposed tick size regime but not less than $0.005 of trading increments, and recommend clear and unambiguous language in the rule structure to avoid any confusion or litigation. The Commission, instead of allowing rebates and other inducements in the marketplace, establish a zero or very low fee structure to eliminate the potential for trading for the sake of volume. The Commission should implement a variable minimum pricing increment model that applies to both quoting and trading of NMS stocks to promote fair and transparent pricing across trading venues. While reducing the access fee caps is a step in the right direction, completely eliminating exchange rebates would further enhance transparency and fairness in the market. I would recommend accelerating the implementation of the revised round lot definition and odd lot dissemination on the SIP to enhance reporting efficiency and reduce delays. It is by the improvement of the system and market for household investors that the Commission can begin to regain public confidence and trust in the market, particularly in light of recent events like the GameStop controversy. The Commissions enforcement of rules and regulations needs to be improved. Failure to deliver securities should be forced to settle or reversed. Continued failures to deliver securities should not be possible. Rule and regulation violations should be assigned fine amounts that will serve as a significant deterrent for breaking the law. The perpetrator should not be able to make any profit for improper behavior. Furthermore, repeat offenders should lose their licenses instead of receiving fines that amount to a cost of doing business. Offenders should be made to admit fault, return profits, and should not be eligible to start new businesses in the financial sector. As a household investor, I would support an additional 0.64 cents more a share to avoid being routed through a wholesaler that has been charged over 70 times by the United States government (https://files.brokercheck.finra.org/firm/firm_116797.pdf). The price improvement provided by these wholesalers is minimal and not worth the damage they bring to the market. As a household investor, I would rather pay commission to avoid being routed through a wholesaler, especially one with a long record of flouting the law like Citadel Securities. As a household investor, I fully support the harmonization of tick sizes across all exchanges. No exceptions, no "reasonable" or vague language. Clear rules, cited by clear language. Some exchanges shouldn’t be granted an unfair advantage over others. It leads to monopolistic control of parts of the market that counteract and eventually kill the positive benefits of competition. The markets are supposed to be fair - so make them fair. I suggest that the definition of tick-constrained, whatever it is, should apply to as much of the market as possible. The rule would be watered down if the definition is too narrow. The important thing is that everyone trades and provides quotes according to the same rules. Make it clear you very much dislike the presence of rebates and other inducements in the marketplace - they are simply payment for order flow by another name. Household investors prefer the fees were reduced to zero, but a small $0.001 fee would be acceptable - No higher. Household investors support the inclusion of odd-lot information in the SIP. Odd lots are a majority of trades and should have a greater impact on price. Make it clear you want odd lots to impact the NBBO and have a concrete effect on both price and broker's duty of best execution. Sincerely, A Concerned US Citizen