Mar. 20, 2023
Hello, I am writing to express my support for measures aimed at increasing transparency and reducing conflicts of interest in the securities market, particularly in the routing of orders by brokers and wholesalers, as well as the regulation of Alternative Trading Systems (ATS). These changes will be highly beneficial to individual household investors and will promote fair and transparent trading practices. Increased transparency in the routing of orders will enable investors to access the best-priced quotations available in the National Market System (NMS). The proposed changes to ATS rules, which promote better alignment with regulatory frameworks for exchanges, would also be advantageous for individual investors. ATS should submit detailed disclosures about their operations, including how they manage conflicts of interest, their order routing practices, and their handling of customer orders. This will make it easier for investors to understand how ATS operate and how their orders are executed. To protect individual investors from abusive practices in the ATS market, ATS should establish and enforce written policies and procedures that prevent fraudulent and manipulative practices. Additionally, they should provide detailed information about the operation of their systems to the SEC, including data on order execution, order routing practices, and the use of dark pools. This will improve the SEC's ability to oversee ATS and ensure compliance with regulatory requirements. By operating consistently with the broader regulatory structure of the securities markets, ATS can promote fair and transparent trading practices that benefit individual investors. Implementing a variable minimum pricing increment model for both quoting and trading of NMS stocks across trading venues would also contribute to fair and transparent pricing. Household investors are highly supportive of initiatives aimed at identifying and preventing fraudulent practices that undermine the credibility, integrity, and functionality of American markets. Sending orders to a wholesaler for internalization should not be the only option available to investors. While brokers may charge high commissions or fees in lieu of payment for order flow (PFOF), implementing a cap would address this concern. 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. To better regulate markets, competition in the marketplace is necessary, 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 these matters, and I look forward to seeing the implementation of these recommendations to enhance market transparency, fairness, and competition. Sincerely,