Mar. 31, 2023
Dear SEC, I am writing to express my full endorsement of the proposed Disclosure of Order Execution Information rule. As trade execution is a complex process, it is crucial to ensure the best execution, particularly for individual household investors who may not have the necessary knowledge to make informed decisions on how to execute their trades. The proposed rule sets a more comprehensive and detailed standard for broker-dealers to adhere to, which will lead to consistently robust best execution practices. However, it is crucial to 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. 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 do not 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. Recent events, such as the SEC charging Robinhood with failure to satisfy its best execution obligation in December 2020, demonstrate the need for stronger best execution standards. 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 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 rule 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. I urge the SEC to adopt the proposed rule as soon as possible. Thank you for your attention to this matter. Sincerely, April Woods