Mar. 19, 2023
Dear Securities and Exchange Commission, I am writing to express my concern regarding conflicts of interest in the routing of orders by brokers and wholesalers, and the lack of transparency in the alternative trading systems (ATS) market. It is my belief that the SEC should take steps to reduce conflicts of interest by increasing transparency in the routing of orders by brokers and wholesalers, with investors having access to the best priced quotations available in the National Market System (NMS). I believe that this can be achieved by requiring ATS to submit detailed disclosures about their operations, including how they manage conflicts of interest, how they operate their order routing practices, and how they handle customer orders. Additionally, I believe that ATS should establish, and enforce, written policies and procedures to prevent fraudulent and manipulative practices. This would help to protect household investors from abusive practices in the ATS market. Providing 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, would further improve the SEC's ability to oversee ATS and ensure compliance with regulatory requirements. I strongly support the proposed changes to ATS rules that promote better alignment with regulatory frameworks for exchanges. I believe that these changes would be beneficial for household investors. I also believe that ATS should operate in a manner that is consistent with the broader regulatory structure of the securities markets, which would benefit household investors by promoting fair and transparent trading practices. It’s my understanding that ATS may be able to implement a variable minimum pricing increment model for both quoting and trading of NMS stocks, which would further promote fair and transparent pricing across trading venues, ultimately benefiting household investors. I believe that this proposal would promote fair pricing across trading venues, which is essential for ensuring a level playing field for all investors. I also believe it’s important for the SEC to prioritize creating a competitive market structure that benefits investors and encourages transparency. Competition in the marketplace is necessary to regulate markets better and barriers to competition, such as the conflicted nature of Payment for Order Flow (PFOF), should be removed, period. Sending orders to a wholesaler for internalization shouldn’t be the only option available for household investors. Brokers may charge high commissions or fees in lieu of PFOF, so a cap should be implemented. Finally, I want to note that household investors support any initiatives aimed at identifying, and preventing, fraudulent practices that undermine the credibility, integrity, and functionality of American markets. The estimated savings for household investors range from $1.12 billion to $2.35 billion, primarily through increased competition to supply liquidity to marketable orders. Competition in the marketplace is necessary to regulate markets better, and barriers to competition, such as the conflicted nature of PFOF, should be removed. The SEC should prioritize creating a competitive market structure that benefits investors and encourages transparency. Thank you for your attention to this matter. Sincerely, Chris Eastvedt