Better Markets has long recognized the myriad problems with the securities market structure¹ and has repeatedly advocated for critical market reforms at the Securities and Exchange Commission, including testimony before the Equity Market Structure Advisory Committee², in the courts, and before Congress. This advocacy has spanned a number of market structure issues.

Better Markets has called for more robust oversight and regulation of critical parts of the current securities trading infrastructure, including comment letters to the SEC in support of Reg. SCI, which enhanced cybersecurity and systems’ security at stock exchanges and self-regulatory organizations, such as Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board³, and enhancements to Reg. ATS that strengthened the SEC’s oversight of Alternative Trading Systems⁴. We also supported the SEC when it rescinded a rule that allowed exchanges to increase access and data fees essentially without the SEC’s involvement⁵.

Better Markets has also addressed the ways that current market structure, and in particular market fragmentation, has created opportunities for predatory market participants, including brokers, high-frequency trading firms, and others, to take advantage of retail traders, through payment for order flow, maker-taker fee structures at exchanges, and other issues that create conflicts of interest between brokers and their clients, lead to inferior execution and, relatedly, enable certain privileged market participants to take advantage of retail investors.

Better Markets has supported SEC efforts to address these issues (and urged it to do more). For example, Better Markets issued a comment letter in support of an SEC proposal that mandated important disclosures which brokers, exchanges, and ATS must make with regards to their order routing decision⁶. Better Markets also advocated in favor of the SEC’s Transaction Fee Pilot for NMS Stocks that sought to assess the potential impact of reforming the maker-taker exchange fee model, filing a comment letter in support of the Pilot⁷ and an amicus brief with the D.C. Circuit in defense of the Pilot against the industry’s (unfortunately, ultimately successful) attack⁸.

Better Markets also filed an amicus brief in the 8^th Circuit in support of the plaintiffs in a class action lawsuit alleging that TD Ameritrade routed orders to maximize profits from order routing revenue rather than fulfilling its fiduciary duty to its clients to seek best execution⁹. Where appropriate, we have also supported efforts by the industry to ameliorate the effects of market fragmentation, including supporting IEX’s “D-Limit” order type that seeks to enable a more level playing field by preventing privileged traders from using latency built into the system to take advantage of other investors¹⁰.

Better Markets has also urged the SEC to improve the trading data available to the public and regulators. For example, Better Markets filed a comment letter in support of a rule that upgraded the market data infrastructure (the so-called Securities Information Processors or SIPs), highlighting the significant deficiencies in the current state of market data, and urged the approval of the proposal¹¹.

Most prominently, Better Markets has been a tireless advocate of efforts to implement the Consolidated Audit Trail, which, as Better Markets pointed out in an op-ed in American Banker, is a critical tool for the SEC to monitor trading.¹² Better Markets has filed at least two comment letters addressing CAT-related rules proposed by the SEC¹³ and also supported the implementation of CAT by sending the SEC a letter pushing back on the false narrative that the CAT would jeopardize fundamental privacy rights¹⁴.

More urgently, Better Markets, through a letter to former Chair Clayton, pressed the SEC not to delay implementation of the CAT¹⁵, and as it became clear that implementation of the CAT was facing unreasonable delays, sent at least three letters critical of various aspects of the SEC’s implementation (or lack thereof) of the CAT, highlighting the unreasonable delay in implementing the CAT and how the process of implementation had become riddled with industry conflicts of interest¹⁶. In light of the SEC’s failure to timely implement the CAT, Better Markets has sent at least two letters to the Senate Banking Committee urging it to conduct oversight of the SEC’s implementation of the CAT¹⁷.

Finally, many of the market structure issues Better Markets has highlighted over the years, and sought to reform, came to a head in the GameStop saga, and Better Markets has produced a plethora of materials related to that ongoing fiasco, including: (1) a letter to the House Financial Services Committee explaining the various market structure issues at play¹⁸; (2) a memorandum¹⁹ and fact sheet²⁰ detailing the issues raised by the GameStop Saga; (3) a fact sheet on Citadel, one of the key players in the GameStop saga (and in market structure issues more generally)21; (4) fact sheets on PFOF and how it relates to GameStop²²; (5) a fact sheet on CAT and how it relates to GameStop²³; and (6) a letter to the Financial Stability Oversight Council, urging it to address the various market structure issues implicated by the GameStop saga²⁴.

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