Mar

24

Dear Chairman Gensler, Commissioner Crenshaw, Commissioner Lizarraga, and SEC review staff:

Thank you for the opportunity to comment in support of proposed rule S7-31-22, ‘Order Competition Rule’.

Commissioner Peirce and Commissioner Uyeda:

Although you both said that you looked forward to reading public comments on the proposed rules, and then voted against opening them up for public comment, I hope you will nonetheless read the comments with an open mind and vote to adopt the rules.

I want to start with a quick thought experiment. Imagine if the NYSE specialists had been able to act like wholesalers: If they could have backed away from quotes, picked and chosen which orders to execute, sent orders they didn’t like to other exchanges, bought on plus ticks and sold on minus ticks for their own book, and placed their orders ahead of others’ orders. How long would the investing public put up with that behavior?

I encourage the SEC to ban payment for order flow and unexposed internalized flow outright. The notion that paying for ‘Right or First Trade’ is legitimate is extremely disappointing. It is a discretion that no registered dealer with a fiduciary duty would be allowed. The ability to pay to see the order first, take or decline that order, and then use the aggregate information from seeing so much order flow first to front run that aggregate order flow for one’s own account is outrageous.

Read the complete post here.


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