Mar. 20, 2023
Dear Ms. Countryman: As an individual retail investor, I thank you for your effort to create more competition and transparency in the market, and I appreciate the chance to comment on these proposals. Below will be some points that I will use IN FAVOR of the proposed rule. Brokers generally act as agents for their customers and, although not specifically defined, owe them a duty of Best Execution, which is derived from common law agency principles and fiduciary obligations. FINRA has a best execution rule, but it’s about time it becomes a rule that the SEC can enforce. I support the Best Execution rule, but I don’t see how “conflicted orders” belong in a Best Execution rule. If payment for order flow continues, these “conflicted” brokers will continue to send our orders anywhere that gets them the most profit. PFOF has been effectively banned in the United Kingdom due to conflict-of-interest concerns, and I’d like to see the same policy implemented here. They didn’t explicitly ban PFOF, rather, they issued guidance that said PFOF is a conflict of interest. After some market makers created their own definitions of PFOF arrangements they reminded them that PFOF is not consistent with best execution. FINRA launched a targeted exam to “evaluate the impact that not charging commissions has or will have on the member firms’ order-routing practices and decisions, and other aspects of member firms’ business.” FINRA stated they will share their findings with member firms at a future date. I’d like this information to be made public as soon as it’s available. Thank you for taking the time to consider these points, and I hope to continue seeing good work from your department in the future. Adam S.