Mar. 19, 2023
Subject: SEC File No. S7-32-22; Release No. 34-96496 - Regulation Best Execution Dear Members of the Securities and Exchange Commission, I am writing to express my support for the new rule proposed under Regulation Best Execution. I believe that the implementation of this rule is crucial for enhancing market fairness and transparency. In this submission, I would like to draw attention to several concerns and suggestions related to the regulation. Citadel should not be the first to receive orders; instead, orders must go to a public auction where all market participants, including pension funds, have an equal opportunity to fill the order. The practice of Payment for Order Flow (PFOF) should be banned in the US due to conflict-of-interest concerns, following the precedent set in the UK. Brokers who do not accept PFOF demonstrate superior execution quality, and retail investors without PFOF receive better prices, which adheres to FINRA's Best Execution guidance. It is worth noting that a recent study found Robinhood's price improvement is not statistically significant, despite PFOF being responsible for around 70% of its revenue. Furthermore, FINRA's findings on the impact of commission-free trading on order-routing practices should be made public to inform investors and regulators alike. TD Ameritrade's order routing decisions may not be motivated by competition, as they pay to get the first look at orders, routing them to firms that net themselves billions of dollars in the process. Dark pools should provide quotes and trades to consolidated market data to bring more transparency to these alternative trading systems. To address the unfair information advantage of wholesalers, brokers should be required to first route orders to auction and specify alternate destinations if the auction is unsuccessful. The state of American markets is anti-competitive, and fair competition is essential, especially within off-exchange systems that currently dominate the market. The Commission should investigate conflicts of interest among market participants to ensure that participants can objectively review the rules. Removing middlemen from the market will improve prices for both individuals and institutions, such as pension funds, and the use of auctions would save billions of dollars taken by wholesalers. To foster a more equitable and transparent market environment, the Commission should take measures to reduce monopolistic behavior and remove profiteering middlemen from the market. The proposed rule to bring more transparency to dark markets should be implemented as soon as possible. Enforcement of SEC rules should be improved with higher fines serving as a significant deterrent for breaking the law, and in some cases, licenses of broker-dealers should be revoked instead of imposing fines that merely amount to a cost of doing business. I believe that these suggestions will help create a more equitable and transparent market environment, ensuring the best interests of investors are upheld. Sincerely, Joshua Fry