Date: 16th December 2022

On Wednesday 14 December, the United Securities and Exchange Commission (SEC) proposed Regulation Best Execution, seeking to establish a best execution regulatory framework mandating that securities brokers and dealers execute deals at the best price available.

BETTER FINANCE, which itself has been highlighting the need for more transparent and fair European stock markets, applauds the SEC for this push that would produce the biggest changes to US equity trading rules since 2005.

Like BETTER FINANCE, the SEC believes PFOF does not lead to the best deals for investors, and estimates that the practice causes as much as 1.5 bn dollars in damages for individual investors every year

Whereas the SEC stops short from an outright ban on Payment for Order Flow (PFOF), like BETTER FINANCE, it proposes a plan B to ensure individual investors are adequately protected, by forcing brokers to offer a wider choice of trading venues. On multiple occasions, and as recently as on 17 November 2022, BETTER FINANCE has advised EU authorities to consider:

  • ensuring adequate, fair, clear, not misleading, and publicly available reporting on commissions received by retail brokers from “dark” operators
  • prohibiting systematic internalisers from dealing and executing trades that are below the “large-in-scale” size (compared to the standard market size),
  • imposing an adequate definition for best execution primarily as obtaining the best price, net of commissions and other costs, for retail trades,
  • requiring brokers dealing with “retail” clients to offer at least one “lit” trading venue.

Pointing to the lack of access to market data from dark venues for retail investors, the US regulator and BETTER FINANCE share the same concerns and fight the same fight by seeking to curb the increasing dominance of dark trading venues at the expense of regulated, retail investor friendly, “lit” ones. Gary Gensler, the SEC Chair, stresses that “the markets have become increasingly hidden from view, especially for individual investors […] in part because there isn’t a level playing field among different parts of the market: wholesalers, dark pools and lit exchanges.”


  • Read the full FT article here.