Key insights
- The SEC is proposing to scrap the 'best price' rules from 2005, which mandated trading platforms to ensure retail investors receive the best possible prices. Critics, like BetterMarkets, argue this will harm retail investors. The potential removal of these protections could lead to less favorable execution prices for individual traders, potentially impacting market fairness and retail investor returns. This regulatory shift may introduce increased volatility or reduced confidence among retail participants.
SEC is now proposing to scrap 2005 rules that forced trading platforms to ensure best prices for retail investors.
According to BetterMarkets (a non-profit) scrapping these rules will hurt retail investors. Retail investors need to post their comments within 60 days.
Following is the link to BetterMarkets pdf
Following is the WSJ gift link of the SEC news. Notice that the wording does NOT indicate how these rules will hurt retail investors.
https://www.wsj.com/finance/regulation/sec-seeks-to-scrap-best-price-rule-c05b4d83?st=gcPbUZ
EDIT: 2016 paper from Stanford “How rigged are stock markets? Evidence from micro-second timestamps”
https://law.stanford.edu/wp-content/uploads/2023/06/SSRN-id2812123-1.pdf
SEC proposal link is below. It’s a 267 page document. Intro starts at page 78!! After Paper Reduction Act 😂😂
To understand the guts of the markets and SEC’s core evidence of why these rules are hurting, take a look at the “Economics” sections in details.