Mar. 06, 2023
Re: SEC Proposal on Regulation NMS: Minimum Pricing Increments, Access Fees, and Transparency of Better Priced Orders (No. S7-30-22) As an international household investor I have seen over the last two years the US stock markets turn into a complete joke. I fully support this what this rule proposes. Market makers like Citadel have way to much influence over the market and any rule that shuts down some of the gray areas they use to manipulate the markets and suck more profit out of household investors has my full support. I have seen it myself in the level 2 data trades where certain orders were filled at prices with SIX decimal points (https://imgur.com/a/CG3nK2k). Household investors cannot trade with six decimals points, only wholesalers have this unfair advantage (https://www.sec.gov/news/speech/gensler-global-exchange-fintech-2021-06-09 ) and given the fact that market makers like Citadel buy shares for their own account and sell to the customers It was most likely a market maker stepping ahead of a household order buying above the bid by an insignificant amount and selling below the ask for an insignificant amount. Do that many times and I believe that's what they call "price improvement". To me it this sounds like they are taking advantage of their market making privileges to profit on the trust and ignorance of the public. I fully support the harmonization of tick sizes across all exchanges. I was shocked to learn that some exchanges get special treatment and are able to leverage that special treatment to build monopolies in some areas of the market. All exchanges should have to quote AND trade in the same increments. Some exchanges shouldn’t be granted an unfair advantage over others. It leads to monopolistic control of parts of the market that counteract and eventually kill the positive benefits of competition. The markets are supposed to be fair - so make them fair. I support the tick size regime proposed by the Commission, and would also support any structure that is clear and does not rely on vague language. For example, some funds and firms might request language like "has a reasonable amount of liquidity at the NBBO". Another example would be the Regulation SHO rule Rule 203(b)(1) and (2) "requires a broker-dealer to have reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due before effecting a short sale order in any equity security" which translates to "I can ignore the rule if I feel my lawyers can help me get away with it". Loose language makes enforcement difficult or impossible, and wastes taxpayer dollars on needless litigation time. Clear language and a clear and unambiguous tick size rule structure are strongly preferred. Please do not include vague language in the application of your rules. I dislike the presence of rebates and other inducements in the marketplace - they are simply payment for order flow by another name. I would prefer you reduce access fees to zero; no "take". I support the inclusion of odd lot information in the SIP, and applaud the Commission's efforts to provide individual investors with more information with which to make better investing decisions - especially concerning which firms are allowed to handle our orders. Two years ago, the majority of trades in the markets were odd lots (55%; from https://bettermarkets.org/newsroom/key-highlights-dennis-kellehers-testimony-march-17-house-financial-services-gamestop-hearing/). For certain tickers, this proportion is certainly much higher. Why are the bids and offers of so many orders kept invisible? If the Commission were to remove odd lot information from this rule, my faith in the U.S. markets would become even more damaged than it already is. I believe the exclusion of odd lots from the NBBO is a problem. Odd lots are now a majority of trades in the markets. Within some stocks, they are the vast majority. The exclusion of odd lots from the price of a stock amounts to the exclusion of most individual investors - most of the voting public. Please look into a way to fairly and proportionately include odd lots in the calculation of the NBBO. Wholesalers have become a cancer to the markets and to be honest it makes me sick investing in the US markets knowing what happens when I place an order. That it most likely never reaches the lit exchange, that my order has absolutely no effect on the price if I am not trading more than a 100 shares, that Citadel or some other market maker rather internalizes my order stepping ahead of it or adding it to the pile of securities sold not yet purchased (https://www.sec.gov/Archives/edgar/data/1146184/000114618423000003/CDRG_BS_Only_2022.pdf , page 8). The securities sold not yet purchased decreased from $65b to $45b in the latest report, which could indicate that they intentionally never purchased the securities when the market was at ATH and are now profiting buying those securities with the market down. There's a real possibility they shorted a large percent of orders they internalized this way and it should be investigated. It doesn't take much to find examples of Citadel failing to provide best price for internalized orders (https://www.sec.gov/news/press-release/2017-11), and joke of a fine. Every rule the SEC passes is only as good as the enforcement that backs it. I want to see higher fines that actually serve as a significant deterrent. I think some broker-dealers should lose their licenses instead of receiving fines that amount to nothing more than a cost of doing business - a cost that is often outweighed by the ill-gotten gains obtained through “honest mistakes”. I would gladly pay more a share to avoid being routed through a wholesaler that has been charged over 70 times by the United States government (https://files.brokercheck.finra.org/firm/firm_116797.pdf). The price improvement provided by these wholesalers is minimal and not worth the damage they bring to the market. Some investors are even going as far as directly registering their investments with the transfer agents sometimes costing them more than 100$ per transfer, this should be a big indicator that individual investors don't care about the cost of paying for their orders if it means that they get what they buy and it has an impact on the price. All of the above should be taken into consideration when reading comment letters from these firms coming out against the new sec rules. They don't care about household investors all they care about is the profits they can extract from our orders and the system they spent billions on perfecting in the goal of maximizing THEIR own profits. They DO NOT represent us. SEC should implement all the new proposed rules as fast as possible and should ignore any complaints and delays coming from these firms. Thank you for finally doing something positive for household investors.