Mar. 31, 2023
In recent years, the financial markets have experienced numerous challenges and scandals that have caused investors to lose confidence in the market's fairness and transparency. The GameStop controversy is just one example of the lack of trust that investors have in the system. In response, the Commission has proposed several measures to improve the transparency and fairness of the market. This essay will outline my support for these measures and recommendations for their implementation. Firstly, I strongly support the Commission's proposed tick size regime. This is an essential step towards promoting fair and transparent pricing across all trading venues. However, to avoid any confusion or litigation, it is crucial to include clear and unambiguous language in the rule structure. Secondly, instead of allowing rebates and other inducements in the marketplace, I recommend establishing a zero or very low fee structure. This would eliminate the potential for trading for the sake of volume, which can be detrimental to market integrity. Thirdly, I believe that implementing a variable minimum pricing increment model that applies to both quoting and trading of NMS stocks is necessary to promote fair and transparent pricing. This will help to ensure that all investors are trading on a level playing field. Fourthly, 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. This is especially important as exchange rebates can create an unfair advantage for certain trading venues. Fifthly, I recommend accelerating the implementation of the revised round lot definition and odd lot dissemination on the SIP to enhance reporting efficiency and reduce delays. This will help to ensure that all investors have access to timely and accurate information about the market. Sixthly, it is crucial to highlight the importance of taking these steps to regain public confidence and trust in the market. Recent events such as the GameStop controversy have highlighted the need for greater transparency and fairness in the financial markets. Seventhly, enforcement matters. We need higher fines, bigger penalties, and actual consequences to deter bad behavior and promote compliance with the rules. Eighthly, I recommend that investors support paying an additional 0.64 cents more a share 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. Investors will gladly pay a commission to avoid being routed through a wholesaler, especially one with a long record of flouting the law like Citadel Securities. Ninthly, I fully support the harmonization of tick sizes across all exchanges. No exceptions, no "reasonable" vague language. Clear rules, clear language. 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. Tenthly, I suggest that the definition of tick-constrained should apply to as much of the market as possible. The rule would be watered down if the definition is too narrow. The important thing is that everyone trades and provides quotes according to the same rules. Finally, I strongly believe that the presence of rebates and other inducements in the marketplace is simply payment for order flow by another name. It is important to make it clear that we dislike these practices and prefer that the fees are reduced to zero, but .001 will do. No higher. Additionally, I support the inclusion of odd-lot information in the SIP. Odd lots are a majority of trades and should have a greater impact on price. It is essential to make it clear that we want odd lots to impact the NBBO and have a concrete effect on both price and broker's duty of best execution. In conclusion, these proposed measures are