Mar. 26, 2023
March 26th, 2023 By Email Vanessa A. Countryman Secretary U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 205499–1090 rule-comments@sec.gov Dear Ms. Countryman, The Securities and Exchange Commission's proposed Tick Size Rule is a crucial step towards promoting fair and transparent pricing across trading venues. The rule aims to eliminate the unfair advantage enjoyed by certain exchanges that allows them to trade at sub-penny intervals, filling retail orders at slightly higher prices and making them appear more skilled than other exchanges. By allowing everyone to trade at sub-penny intervals, the rule levels the playing field, promoting fair competition in the marketplace. To ensure the effectiveness of the rule, it is vital that the language in the rule structure is clear and unambiguous, avoiding any confusion or litigation. Additionally, instead of allowing rebates and other inducements in the marketplace, a zero or very low fee structure should be established to eliminate the potential for trading for the sake of volume. This will prevent the manipulation of the market by those with deeper pockets, promoting transparency and fairness for all participants. The implementation of a variable minimum pricing increment model that applies to both quoting and trading of NMS stocks is also essential to ensure fair and transparent pricing across trading venues. While reducing the access fee caps is a step in the right direction, completely eliminating exchange rebates would further enhance transparency and fairness in the market. Investors should not have to pay a premium to avoid being routed through a wholesaler that has been charged over 70 times by the United States government. The price improvement provided by these wholesalers is minimal and not worth the damage they bring to the market. Enforcement of the rule is also crucial, and higher fines and penalties must be imposed to deter violations. Investors should support the harmonisation of tick sizes across all exchanges, with clear rules and clear language to prevent any exchange from gaining an unfair advantage over others. The markets are supposed to be fair, and it is imperative to make them fair. The inclusion of odd-lot information in the SIP is also important, as odd lots are a majority of trades and should have a greater impact on price. Investors should make it clear that they want odd lots to impact the NBBO and have a concrete effect on both price and broker's duty of best execution. In conclusion, the SEC's proposed Tick Size Rule is a step in the right direction towards promoting fair and transparent pricing across trading venues. However, to ensure its effectiveness, clear language, zero or very low fee structures, and strong enforcement must be implemented. Investors must support the harmonisation of tick sizes across all exchanges, the inclusion of odd-lot information in the SIP, and the elimination of rebates and other inducements in the marketplace. By taking these steps, the market can regain public confidence and trust, promoting fair competition and a level playing field for all participants. Sincerely, Grant Carroll