Feb. 12, 2023
February 12, 2023 Dear SEC, Im happy about this proposal. In addition, Id like to request the following on behalf of retail traders: 1. Require that all market participants have the same ability to submit orders in the same pricing increments. Currently, retail traders can only submit orders in increments of $0.01 (for most stocks), but off-exchange centers (ATs, Wholesalers, Market Makers) can trade these in increments of $0.0001. This is unfair. This effectively allows them to front-run retail limit orders by posting an order just barely better than a retail limit order. Retail traders cannot compete. 2. Require all order sizes to be treated the same, regardless of their status as a round lot or odd lot. Its unfair when odd lots are prioritized differently than round lots. Require this of all market participants, especially off-exchange ATs, Wholesalers, and Market Makers. With our modern, highly-automated financial systems, theres no reason to distinguish between lot sizes, which is an approximate proxy for distinguishing between a retail and professional trader. 3. Require limit orders to be matched before later limit orders, at a given price. Its unfair to allow later limit order to be filled before sooner limit orders, even if theres an order size difference. This rule should be applied internally at each order matcher, especially at an off-exchange ATS or Wholesaler or Market Maker. This prevents these agents from effectively front-running retail orders or giving some order flow preferential treatment, such as their own book. This rule would ideally also be applied globally, where an order submitted at one exchange should fill before a later order at another exchange. This has technical challenges to being perfect because of time delays in communication between market centers, but there are ways of getting quite close. In any case, youd need to prevent the loophole where trading firms simulate matching two external orders by trading each from their own book in quick succession. They can claim its just trading from their own book, when its actually matching external orders. 4. Require per-order trading costs to be the same for both active traders and inactive traders. Some brokers penalize one of these groups. All order flow should be treated the same, regardless of volume or professional status. 5. Prevent market participants from knowing or inferring the kind of trader taking the other side of their order. Often retail order flow is known to be retail by off-exchange centers. As such, it can be treated differently and taken advantage of.