Feb. 24, 2023
February 24, 2023 I support the proposed rule changes in Release No. 34-96496 File No. S7-32-22. The Proposed Rule 1100 best execution standard is appropriate because payment for order flow has undermined trust in US markets. The Commission has identified all the differences between the proposed best execution standard and the standards under FINRA Rule 5310 and MSRB Rule G-18. I believe these standards are appropriate. Rule 1100 is consistent with prior Commission statements, including those described in section II.B. The proposed best execution standard should apply to natural persons who are associated persons of a broker-dealer. There are not alternative definitions that should be used instead, and the application of Rule 1100 is appropriately limited. The Commission should define institutional customer for the purposes of Rule 1100 as any person that is a qualified institutional buyer (QIB) under Rule 144A of the Securities Act of 1933. The application of Rule 1100 should not be limited to only certain types of securities or certain trading protocols. The rule should be applied as uniformly as possible, and the Commission should not provide a broader exception for institutional customers. Proposed Rule 1101a should be enforced as well. In order to maintain public trust in markets, it is important for policies to be documented and publicized in written form. If the platform the security is traded on does not allow for best execution standards as required under Rule 1101 or if different policies are applied to different customer types, those need to be documented and provided to all customers in a transparent format. The definition of a \"transaction with a retail customer\" should not exclude a transaction with a family office. I believe the proposed Rule 1101(b)(1) and (2) represent an appropriate approach to addressing conflicted transactions. Broker-dealers should be required to establish, maintain, and enforce best execution policies and procedures for conflicted transactions that address the additional requirements under proposed Rules 1101(b)(1) and (2). The integrity of our markets and the trust in our system depending on your enforcement. I do not believe that a retail customers would benefit from potentially having their orders exposed by a broker-dealer to a broader array of liquidity sources where the broker-dealer would have a conflict of interest. Payment for order flow undermines trust in our public markets, and other countries had good reason to ban it. I believe you are on the right path to reform it and regulate it. I do not believe the Commission should provide staggered compliance dates for broker-dealers of different sizes. The Commission should set a date for this rule change to take place and stick to it. I appreciate the efforts of the Commission to do this reform and restore trust in our markets. Thank you for your attention to this issue.