July 7, 2015
i oppose an additional option exchange. we have too much fragmentation in the equities market. we do not need additional options exchanges.
fragmentation causes a thinner order book at all options exchange and allows fast intermediaries to take advantage of retail orders. this means that any retail order must pay intermediaries for their "service" (that retail buyers/sellers do not necessarily want). retail buyers/sellers want a "natural" partner, someone who owns the position or wants to buy the position. they do not want an intermediary that is advantaged by "professional advantages" and thus pay a financial tax for their service. worse, this financial tax on the trade may not be the only financial tax paid. many financial intermediaries sometimes initiate trends that work to the disadvantage of the less informed retail investor.
i see no justification for allowing the exchange to do this. once again, this exchange has focused on the plumbing of the rule proposal rather than the impact of rule proposal on the market in general.
the equities market is impacted directly by the options market.
while i am not pleased with CME's defense of anonymous allston in HTG's complaint, i don't think that EDGX will do a better job at supervising a new exchange type. instead, i think EDGX probably does a similarly bad job of supervising their exchange trading.
as evidence, i would like to bring the SEC's attention to the recent regulation regarding order types. the # of order types multiplied without regulatory approval over the years. the exchanges were probably approached by professional traders regarded by the exchange as "clients" and several order types and procedures advantaged the professional traders. and i think that this proposal began in a similar manner. if another exchange could be established, there would be a time difference between exchanges that could be exploited by faster intermediaries in order to trap the retail order in a less advantageous price and force the retail order to pay the financial tax for this service.
the SEC is supposed to protect the public interest by their mission statement.
a new options exchange would not be an improvement.