Mar. 29, 2023
Enforcement is key to the effectiveness of SEC rules, and I believe higher fines would serve as a better deterrent. I also think that instead of fines, some broker-dealers should have their licenses revoked to prevent "honest mistakes" from being outweighed by the gains they make. I fully support efforts to reduce the speed games that harm the integrity, credibility, and functioning of American markets. I also support any moves to reduce the "farming" of individuals' orders for rebate money. The current system grants a profound information advantage to wholesalers, and I believe brokers should first route orders to the auction before specifying where they should go if the auction fails, to ensure the market has equal knowledge. I support rule changes that increase transparency in dark markets and give the investing public easy access to market information. Fair competition is crucial for the protection of investors and the maintenance of fair and orderly markets. The SEC has not done enough to ensure fair competition, particularly in regulating the off-exchange systems that dominate the market. The proposed rule is a step in the right direction, and monopolistic behavior needs to change. Fragmentation of the markets benefits only dominant players, and I prefer a simpler, more transparent, and free market structure like the one proposed in this rule. The current system incentivizes brokers to route orders to the highest bidder, which often means routing to their own affiliated wholesalers. By prohibiting these types of arrangements, the proposed rule would help ensure that brokers are always acting in their clients' best interests. This is an important step towards a fair and transparent market that benefits all participants, not just a select few. Title 15 U.S.C. 78k-1 of the U.S. legal code, also known as the "OTC (Over-the-Counter) Market Reform Act", emphasizes that dealers in the OTC market do not need to be part of the market structure. This law was enacted to regulate the OTC market, which is a decentralized market where securities are traded directly between two parties without the involvement of an exchange. The focus of this law is to require dealers to disclose their trading practices and provide investors with information about the securities they trade. It also requires dealers to register with the Securities and Exchange Commission (SEC) and comply with certain reporting requirements, of which there is very little reporting. The goal of this law is to promote transparency and protect investors in the OTC market. Dr. Richard R. Lindsey, Director of Market Regulation for the SEC said “Really what you [retail traders and average Americans] wanted was competition in the marketplace. And that competition really regulated markets much better than the SEC could. We didn't view it as our job to design the market, we viewed it as our job to try to allow more competition to exist.. To let competition exist you actually have to remove the barriers to competition that exist” In conclusion, the proposed rule represents a significant step forward in promoting fair competition, eliminating conflicts of interest, and creating a more transparent and equitable market structure. I urge the Commission to implement this rule as soon as possible in order to protect the interests of individual investors, institutions, and the integrity of American markets as a whole. Daniel Kalish