Mar. 3, 2023
March 3, 2023 As a retail investor, I strongly support the proposed Regulation Best Execution from the SEC. The duty of best execution is crucial in protecting investors and ensuring fair and efficient markets. The proposed rule would establish a comprehensive framework for broker-dealers to consistently provide the best execution for customer orders, including in situations where there are conflicts of interest. One such conflict of interest is payment for order flow. While some argue that payment for order flow benefits retail investors by reducing their trading costs, the reality is that it creates a misalignment of incentives for broker-dealers. They may have an incentive to route orders to the market maker that pays the most, rather than seeking the best execution for their customers. This can result in retail investors receiving less favorable prices for their trades. Less efficient price discovery can also have a lasting impact on the value of my long term investmentswhich far outweigh any benefit of a reduced trading cost via payment for order flow. The proposed rule would require broker-dealers to have policies and procedures in place to address conflicts of interest, such as payment for order flow. They would need to assess a broader range of markets for conflicted transactions and document their compliance with the best execution standard. Furthermore, the quarterly review of execution quality would provide transparency and accountability for the broker-dealers' practices. Some may argue that the existing regulatory framework for best execution is sufficient, but the SEC recognizes that the framework can be improved. The proposed rule would provide a more detailed and comprehensive standard for broker-dealers to follow, resulting in consistently robust best execution practices. In conclusion, the proposed Regulation Best Execution is a necessary step in protecting retail investors and promoting fair and efficient markets. It would establish a clear and comprehensive framework for broker-dealers to consistently provide the best execution for customer orders, even in situations where there are conflicts of interest. I urge the SEC to adopt this rule to ensure that retail investors are receiving the best possible execution for their trades.