Mar. 31, 2023
Thank you for your proposal to have a Disclosure of Order Execution Information. As a household investor, i believe that it is very important to have a fair and competitive marketplace. I am in favor of this new rule. However, this rule doesnt have any effect if it is not enforced, and if the punishment is not sever enough to be a deterrent. Therefore, i would ask that fines would be significant to deter, and all profit made by not following this and any other sec rule be returned. Those with multiple violations should be losing their license and receiving jail time. Below are some of the points as to why I am in favor of this proposal. 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 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. 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 SEC with failure to satisfy its best execution obligation, resulting in an aggregate loss of $34.1 million for its customers. Robinhood also 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 favourable pricing when a better price was available. The profit they made by failing to do this far out-weighed the fines they had to pay. These were merely the times they were caught, they profited even more by doing it and not getting fined at all. 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 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 listening to the concerns of this household investor, Andy Schutt