Jan. 10, 2023
January 10, 2023 I believe that proposal S7-32-22 is well intentioned but does not go far enough. Best execution should be the standard for any broker dealer at all times. This rule may help to prevent broker-dealers from front running trades and skimming profits from the arbitrage, however it fails to address other issues. Namely, it continues to allow broker dealers to self regulate by allowing them to, \"establish, maintain, and enforce written policies and procedures reasonably designed to comply with the best execution standard\". Thereby they create an internal monitoring system rather than an external one. Much of the risk of the market is related to their inability to self regulate / govern / monitor. I believe we are at a point where this needs to be taken away from them by forcing increased transparency rather than allowing them to create their own policies which will ultimately benefit themselves and hurt retail investors. I absolutely believe we should, \"Require more robust policies and procedures for broker-dealers that engage in certain conflicted transactions for or with a retail customer\". However I believe the best way of this would be increased transparency. All trades should occur with an identified buyer / seller on a lit exchange rather than an OTC (such that both buyer / seller are identified and the shares are verified as trading) to prevent strategic failure to delivers, a strategy often employed by broker-dealers in conjunction with market makers using payment for order flow. Along with this trades should have to settle same day. Given the advances in technology there is no reason for trades to settle several days later (particularly as this contributes to failures to deliver) and this is often abused to help naked short sellers. Lastly, I do not believe exemptions should be made for introducing brokers. There shouldn't be exemptions from the laws of transparency and fair trading. Exemptions in the financial markets lead to abuses which hurt retail investors. Creating an exemption here will undoubtedly cause malicious broker-dealers to claim the exemption and continue bypassing the rules. All broker-dealers should be required to execute all trades at the best available price, on a lit exchange, without front running. Again I emphasize that I support the spirit of this proposal however it does not go far enough. We need transparency, we need lit exchanges, we need equal rules for all parties, and we need external monitoring to prevent the continued abuse of market trading by a few ultra-wealthy corporations.