Jan. 05, 2023
January 5, 2023 To the question if some broker-dealers incorporate all of the best execution factors from FINRA and MSRB in their polices and procedures the short answer is No. There seems to be a misguided focus on providing the retail investor with the best execution price but not with the best execution market. Normally the price executed is not the best. However price is not the only factor that must be considered as specified. The best market is also a factor that is ignored by Broker-Dealers and Market makers by routing retail investor orders to Alternative Trading Systems. If the routing of an order into a ATS results in the stock price not reflecting a true holistic result of the order in the market then that routing is a manipulation and does not reflect the order going to the best market for the investor. For example, if 80% of a stocks buy orders on any given day are routed to a ATS and the stock price does not reflect this holistic buying pressure and/or in fact declines in valu e then the stock is being manipulated and the retail orders are not being reflected in the best market. If the same stock with the same 80% buying was done in the best market outside of ATS then it is reasonable to expect the price of the stock to increase as buying reflects. That would be the best market for this specific example. More diligence is needed by the SEC to insure that retail investors are protected against stock manipulation as this. A more level playing field is needed as the retail investor is not protected under the current rules.