Mar. 31, 2023
I agree that the Disclosure of Order Execution Information rule is necessary to promote transparency and protect household investors. Many investors may not fully comprehend the complexities involved in choosing the best execution method for their trades, making it difficult for them to evaluate the quality of execution provided by their brokers. Clear principles and guidance on how to read and interpret the data in Regulation NMS Rule 605 reports would be beneficial, particularly for household investors who may not have a deep understanding of the American markets. By providing this information, investors can better assess the quality of execution they receive and make informed decisions about their investment strategies. Overall, the Disclosure of Order Execution Information rule is a crucial step towards ensuring that household investors have access to accurate and transparent information about their trades, which will promote fair and efficient markets. Brokers have a duty to provide their customers with Best Execution based on agency principles and fiduciary obligations. However, this duty needs to be enforced by the SEC through a rule. A Best Execution rule should not include orders that present conflicts of interest. Customers may be unaware of revenue arrangements between brokers and subpar trading firms or paying higher transaction prices without the Best Execution rule. Differences in trading venues may result in missed opportunities, while information leaks and less reliable settlement processes can cause delays in receiving proceeds. In December 2020, Robinhood was charged by the SEC with failing to meet its Best Execution obligation, resulting in customers losing $34.1 million. Robinhood did not disclose payments received for routing trades to specific firms and made misleading statements. In 2017, Citadel paid $22.6 million to the SEC to settle Best Execution charges for executing customer trades at less favorable prices when better prices were available. Brokers who recommend 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 increase transparency and hold broker-dealers accountable for their practices. The proposed Regulation Best Execution is a crucial step in protecting household investors and promoting fair and efficient markets by ensuring that they receive the best possible execution for their trades consistently. This rule will provide a more comprehensive standard for broker-dealers to follow. Thanks, A concerned household investor.