Mar. 27, 2023
Vanessa Countryman, Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090 Hello Ms. Countryman, The proposed rule is a crucial measure for safeguarding individual investors and promoting fair and efficient markets. In trade execution, best execution is vital, particularly for individual investors who may not fully understand the intricacies involved in executing a trade. Brokers have a duty of best execution to their customers, which arises from common law agency principles and fiduciary obligations. However, this duty needs to be converted into a rule that the SEC can enforce to ensure transparency and accountability for broker-dealers' practices. Orders that conflict with best execution should not be included in the rule, as they can negatively affect execution quality, and prevent individual investors from receiving the best possible execution for their trades. Without the proposed rule, customers may not be aware of revenue arrangements between brokers and subpar trading firms, or that they may be paying higher transaction prices. Different trading venues may offer different prices, and slower execution can lead to missed opportunities. Information leaks can hinder a successful transaction, and less reliable settlement processes can delay the receipt of proceeds. Providing clear guidance on how to read and interpret data in Regulation NMS Rule 605 reports is essential, particularly for retail investors who may not have a deep understanding of the markets. Quarterly reviews of execution quality would ensure transparency and accountability for broker-dealers' practices, which would safeguard individual investors. In December 2020, Robinhood was charged by the SEC for failing to fulfill its best execution obligation, which resulted in an aggregate loss of $34.1 million for its customers. Robinhood made misleading statements and did not disclose payments received for routing trades to specific firms. In 2017, Citadel paid the SEC $22.6 million to settle best execution charges for executing customer trades at less favourable pricing when a better price was available. Brokers recommending mutual funds with 12b-1 fees and revenue sharing arrangements with clearing brokers have also faced best execution charges from the SEC. Met vriendelijke groet / with kind regards, Eege Klop Oprichter