Mar. 20, 2023
Dear SEC, I am writing to express my passionate support for File No. S7-32-22, Release No. 34-96496, regarding Regulation Best Execution. The proposed changes to the ATS rules would promote better alignment with regulatory frameworks for exchanges and benefit individual household investors, like a breath of fresh air in a stuffy room. To reduce conflicts of interest, the SEC should increase transparency in the routing of orders by brokers and wholesalers, with investors having access to the best priced quotations available in the NMS, like opening the curtains to let in the sunshine. ATS should submit detailed disclosures about their operations, including how they manage conflicts of interest, operate their order routing practices, and handle customer orders, like providing a map to help investors navigate a complex maze. It is important to establish and enforce written policies and procedures to prevent fraudulent and manipulative practices, like a police force patrolling the streets to deter criminals. This would help to protect individual investors from abusive practices in the ATS market, like a knight in shining armor coming to rescue a damsel in distress. ATS should provide detailed information about the operation of their systems to the SEC, including data on the execution of orders, order routing practices, and information about the use of dark pools, like an open book that everyone can read. ATS should operate in a manner that is consistent with the broader regulatory structure of the securities markets, which would benefit individual investors by promoting fair and transparent trading practices, like a conductor leading an orchestra to create beautiful music. Implementing a variable minimum pricing increment model for both quoting and trading of NMS stocks would further promote fair and transparent pricing across trading venues, ultimately benefiting investors, like providing a level playing field for all players. It is crucial to identify and prevent fraudulent practices that undermine the credibility, integrity, and functionality of American markets, like a virus that threatens to infect the whole system. Household investors support any initiatives aimed at this goal, like soldiers ready to defend their country. Sending orders to a wholesaler for internalization should not be the only option available to investors, like being forced to eat at a restaurant with limited options on the menu. Brokers may charge high commissions or fees in lieu of PFOF, so a cap should be implemented, like imposing a speed limit on a busy highway. The estimated savings for retail investors range from $1.12 billion to $2.35 billion, primarily through increased competition to supply liquidity to marketable orders, like a treasure chest waiting to be discovered. Competition in the marketplace is necessary to regulate markets better, and barriers to competition, such as the conflicted nature of PFOF, should be removed, like tearing down a wall that divides a community. The SEC should prioritize creating a competitive market structure that benefits investors and encourages transparency, like a gardener cultivating a beautiful garden. Thank you for considering my views. Sincerely, Anthony Lee