Mar. 31, 2023
Dear SEC, Ensuring best execution is crucial for individual investors who may not have a comprehensive understanding of trade execution complexities. Retail investors may benefit from clear guidance on how to read and interpret Regulation NMS Rule 605 reports. While brokers have a duty of Best Execution based on common law agency principles and fiduciary obligations, this should be made enforceable by the SEC. Conflicted orders should not be included in Best Execution rules. The lack of a Best Execution rule may prevent customers from knowing about revenue arrangements between brokers and subpar trading firms, or paying higher transaction prices. Different trading venues may have varying prices, missed opportunities due to slow execution, information leaks, and less reliable settlement processes can delay receipt of proceeds. In December 2020, Robinhood was charged by the SEC with failing to meet its best execution obligation, resulting in an aggregate loss of $34.1 million for its customers, due to misleading statements and undisclosed payments for routing trades. In 2017, Citadel paid the SEC $22.6 million to settle best execution charges for executing customer trades at less favorable pricing. Brokers who recommend mutual funds with 12b-1 fees and revenue sharing arrangements have also faced best execution charges from the SEC. To ensure transparency and accountability for broker-dealer practices, quarterly reviews of execution quality would be beneficial. The proposed Regulation Best Execution sets a detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices, and promoting fair and efficient markets while safeguarding household investors. -a concerned household investor