Mar. 19, 2023
Dear Securities and Exchange Commission, I am writing to provide my comments on the proposed Regulation Best Execution (File No. S7-32-22; Release No. 34-96496). I commend the Commission for taking steps to enhance the existing regulatory framework regarding broker-dealers' duty of best execution. In response to the proposed rule, I would like to offer my perspectives on specific points mentioned in the document: Regarding the proposal to require detailed policies and procedures for all broker-dealers (17 CFR Parts 240 and 242), I support the idea of having stricter guidelines in place. By imposing such rules, the Commission can ensure a fairer and more transparent market environment for all participants. In reference to the proposed enhancement of the existing regulatory framework (Summary), I urge the Commission to consider implementing a rule that would prevent Citadel from being the first to receive orders. Instead, orders should go to a public auction, where all market participants, including pension funds, have an equal opportunity to fill the order. The proposal to require more robust policies and procedures for broker-dealers engaging in certain conflicted transactions with retail customers (Summary) is a step in the right direction. I believe that the Commission should follow the UK's example in effectively banning Payment for Order Flow (PFOF) due to conflict-of-interest concerns. With regard to the proposed review and documentation requirements (Summary), I recommend that the Commission require broker-dealers to disclose their order-routing practices and decisions, particularly those that do not accept PFOF. This would help demonstrate the superior execution quality of such brokers compared to those who do accept PFOF. In light of the review and documentation requirements (Summary), the Commission should consider making public the findings of FINRA's evaluation of the impact of not charging commissions on member firms' order-routing practices. This would contribute to transparency and help assess whether retail investors dealing with non-PFOF brokers receive better prices, in line with FINRA's Best Execution guidance. To enhance transparency in dark markets, I suggest that the Commission require dark pools (Alternative Trading Systems) to provide quotes and trades to consolidated market data (17 CFR Parts 240 and 242). In addressing the unfair information advantage of wholesalers (17 CFR Parts 240 and 242), I recommend that the Commission require brokers to first route orders to the auction and specify where the order should go if the auction is unsuccessful. This would help ensure fair competition within the off-exchange systems that currently dominate. In conclusion, I appreciate the opportunity to express my views on the proposed Regulation Best Execution. I hope the Commission will take these points into consideration when finalizing the regulation to create a more transparent, competitive, and fair market environment. Sincerely, Andrew Poirier