Mar. 31, 2023
I am writing to express my support for initiatives that aim to reduce conflicts of interest and increase transparency in the routing of orders by brokers and wholesalers. Ensuring investors have access to the best priced quotations available in the NMS is essential to maintaining a fair and transparent market. The proposed changes to ATS rules, which promote better alignment with regulatory frameworks for exchanges, would be highly beneficial for individual household investors. I recommend that ATS platforms submit detailed disclosures about their operations, including conflict of interest management, order routing practices, and customer order handling. This would enable investors to better understand how ATS platforms operate and how their orders are executed. To protect individual investors from abusive practices in the ATS market, ATS platforms should establish and enforce written policies and procedures to prevent fraudulent and manipulative practices. Providing detailed information about the operation of their systems to the SEC, including data on order execution, order routing practices, and dark pool usage, would improve SEC oversight and ensure compliance with regulatory requirements. Operating ATS platforms in a manner consistent with the broader regulatory structure of the securities markets would promote fair and transparent trading practices, benefiting individual investors. I also recommend implementing a variable minimum pricing increment model for both quoting and trading of NMS stocks to further promote fair and transparent pricing across trading venues. Household investors support 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. In addition, brokers may charge high commissions or fees in lieu of PFOF, so a cap should be implemented to protect retail investors. Increased competition to supply liquidity to marketable orders is estimated to save retail investors between $1.12 billion and $2.35 billion. Competition in the marketplace is essential for better market regulation, 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. By implementing these recommendations, we can work together to foster a fair and transparent market for all participants. Sincerely, Farris Y. Nawas, an individual investor