Mar. 12, 2023
I support the SEC's rule proposal to reduce market inefficiencies and increase transparency. However, the effectiveness of these rules will depend on strong enforcement measures. To truly deter bad actors, fines need to be higher and some broker-dealers should lose their licenses rather than just paying fines that are considered a cost of doing business. I appreciate any efforts to reduce fraudulent activities that damage the integrity and functioning of American markets. This includes reducing inducements and "farming" of individuals' orders for rebate money. The Commission should also address unfair information advantages by having brokers route orders first to the auction and specifying where the order should go if the auction is unsuccessful, rather than going through a wholesaler. The SEC needs to ensure fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets. The current market is dominated by off-exchange systems and has clear monopolistic behavior, with a small group of six off-exchange dealers capturing 90% of marketable orders of individual investors in NMS stocks, and 66% being captured by just two firms. Research in this area heavily suggests that internalization is bad for markets https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4070056 I prefer a simple, transparent, and free market structure that benefits all market participants, not just large, dominant players. Wholesalers have a long history of flouting the law and are not transparent about the quality of their services, and therefore, I would gladly pay more per share to avoid being routed through them. Wholesalers are profiteering middlemen that need to be removed from the market to improve prices for individuals and institutions. sincerely, -Cullen Cullen McGough VP of Enrollment, Marketing, and Communications