Mar. 31, 2023
March 31, 2023 The duty of Best Execution is owed by brokers to their customers and is derived from common law agency principles and fiduciary obligations. FINRA has a best execution rule, but the SEC should enforce it as well. However, I don't think \"conflicted orders\" should be part of a Best Execution rule because brokers will continue to send orders to wherever they can make the most profit if payment for order flow persists. The United Kingdom effectively banned PFOF due to conflict-of-interest concerns, and I believe the same policy should be implemented in the US. While they didn't explicitly ban PFOF, they issued guidance stating that PFOF is a conflict of interest. Some market makers created their own definitions of PFOF arrangements, but the UK reminded them that PFOF is not consistent with best execution. FINRA conducted a targeted exam to evaluate how not charging commissions affects member firms' order-routing practices and business decisions. They plan to share their findings with member firms, but I would like this information to be made public as soon as possible. The duty of Best Execution is owed by brokers to their customers and is derived from common law agency principles and fiduciary obligations. FINRA has a best execution rule, but the SEC should enforce it as well. However, I don't think \"conflicted orders\" should be part of a Best Execution rule because brokers will continue to send orders to wherever they can make the most profit if payment for order flow persists. The United Kingdom effectively banned PFOF due to conflict-of-interest concerns, and I believe the same policy should be implemented in the US. While they didn't explicitly ban PFOF, they issued guidance stating that PFOF is a conflict of interest. Some market makers created their own definitions of PFOF arrangements, but the UK reminded them that PFOF is not consistent with best execution. FINRA conducted a targeted exam to evaluate how not charging commissions affects member firms' order-routing practices and business decisions. They plan to share their findings with member firms, but I would like this information to be made public as soon as possible.