Subject: S7-32-22
Form Type G

 
Best Execution S7-32-22 


Brokers generally act as agents for their customers and, although not specifically defined, owe them a duty of Best Execution, which is derived from common law agency principles and fiduciary obligations. 


FINRA has a best execution rule, but it’s about time it becomes a rule that the SEC can enforce. I support the Best Execution rule, but I don’t see how “conflicted orders” belong in a Best Execution rule. If payment for order flow continues, these “conflicted” brokers will continue to send our orders anywhere that gets them the most profit. 


PFOF has been effectively banned in the United Kingdom due to conflict-of-interest concerns, and I’d like to see the same policy implemented here. They didn’t explicitly ban PFOF, rather, they issued guidance that said PFOF is a conflict of interest. After some market makers created their own definitions of PFOF arrangements they reminded them that PFOF is not consistent with best execution. 


FINRA launched a targeted exam to “evaluate the impact that not charging commissions has or will have on the member firms’ order-routing practices and decisions, and other aspects of member firms’ business.” FINRA stated they will share their findings with member firms at a future date. I’d like this information to be made public as soon as it’s available. 




I think it’s imperative that the Commission take these steps in order to start gaining back confidence and trust from the public. Seeing what happened with Gamestop eroded Investor Confidence so much that Investors have been taking their shares out of the system to hold them with the Transfer Agent. 


I’m sure my letter will be carefully considered, and I want to again thank you for the opportunity to comment. 


Thank you, 


Grace Hiller, Professor of Chemistry 


​ 


Sources that I cited on my letter (Gensler said he wanted DATA!): 


https://www.finra.org/media/document/11737 


https://www.finra.org/rules-guidance/rulebooks/finra-rules/5310 


https://www.cfainstitute.org/-/media/documents/article/position-paper/payment-for-order-flow-united-kingdom.ashx#:~:text=Payment%20for%20order%20flow%20(PFOF)%20is%20the%20practice%20of%20market,order%20flow%20by%20market%20makers%20is%20the%20practice%20of%20market,order%20flow%20by%20market%20makers) 


https://www.finra.org/rules-guidance/guidance/reports/2022-finras-examination-and-risk-monitoring-program/disclosure-routing-information 


https://www.sec.gov/rules/final/34-43590.htm#secv 


https://www.finra.org/rules-guidance/guidance/reports/2022-finras-examination-and-risk-monitoring-program/disclosure-routing-information 


https://www.sec.gov/files/reg-nms-rule-606-disclosures-risk-alert.pdf 


https://www.thetradenews.com/citadel-securities-forks-out-2-6-billion-annually-for-payment-for-order-flow-and-most-of-its-on-options/ 


https://files.brokercheck.finra.org/firm/firm_116797.pdf 


https://www.merriam-webster.com/dictionary/monopoly 


https://www.sec.gov/rules/proposed/2022/34-96495.pdf 


https://www.sec.gov/rules/final/2020/34-90610.pdf 


https://press.princeton.edu/ideas/how-to-make-money-in-nanoseconds 


https://news.gamestop.com/static-files/5a610aaf-6606-4173-86a1-cba6abdb204a