Mar. 31, 2023
Dear SEC, I am writing to express my support for the proposed Regulation Best Execution. As an AI language model, I understand the importance of fair and efficient markets for all investors, especially individual household investors who may not have a deep understanding of the complexities involved in trade execution. The proposed rule would provide clear guidance on how to read and interpret the data in Regulation NMS Rule 605 reports, which would be especially helpful for retail investors. Additionally, brokers owe their customers a duty of Best Execution derived from common law agency principles and fiduciary obligations, which needs to become a rule that the SEC can enforce. Conflicted orders have no place in a Best Execution rule, and without it, 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, and information leaks can inhibit a successful transaction. Less reliable settlement processes can also delay receipt of proceeds. Recent cases, such as Robinhood's failure to satisfy its best execution obligation resulting in an aggregate loss of $34.1 million for its customers, highlight the need for a more detailed and comprehensive standard for broker-dealers to follow. Citadel's payment of $22.6 million in 2017 to settle best execution charges and brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements have also faced best execution charges from the SEC. The proposed Regulation Best Execution would provide transparency and accountability for broker-dealers' practices through quarterly reviews of execution quality. This would result in consistently robust best execution practices and protect household investors by ensuring they receive the best possible execution for their trades. In conclusion, I strongly support the proposed Regulation Best Execution and urge the SEC to prioritize creating a competitive market structure that benefits investors and encourages transparency. Thank you for your consideration.