Mar. 16, 2023
March 16, 2023
Dear SEC
As a household investor I support this proposed rule, however I am against any exemptions for market makers and other parties. The free market should be a level playing field for all. If an asset is illiquid it should be illiquid. Buy orders should not be routed off the lit market, while sell orders are. Otherwise the invisible hand of the market cannot exist and it clearly does not today.
- End Payment For Order Flow:
Brokers face an intractable conflict-of-interest when their profitability is pitted against customer execution quality, and weak best execution regulation and enforcement. Order routing inducements must end or be disclosed and passed on to the end investor, including exchange rebates and payment for order flow.
There are several problematic issues wrapped up in PFOF. These issues include: Retail orders should not be unnecessarily routed off-exchange to a small set of internalizers. Doing so widens the spreads in the market by 25% for all participants. We believe in open competition for order flow on transparent venues.
Best execution standards have not maintained pace with technology and the evolution of order routing. These standards need to evolve into an order-by-order standard, rather than an aggregate performance standard.
Order routing disclosures should include execution quality and performance statistics.
- Order-by-order standard:
Brokers that execute customers orders should be required to obtain best execution for each order, based on market conditions existing when they receive each order, rather than based on an average of prices for multiple customer orders.
Please consider the comments of household / retail investors and not those of corporations that profit off the current rules. Unfortunately the current very low fines are just a business expense. Fines should always exceed any profits that were achieved by circumnavigating the rules.
Thank you for providing the opportunity to comment.
Sincerely
Florian Rhyn