In the Press
January 31, 2023

Retail Auctions Kill Competition, Market-Makers Say (International Financial Law Review)


A recent proposal from the Securities and Exchange Commission (SEC) to process retail trading orders through auctions has sparked concerns among wholesalers, who argue that end investors would suffer the most from such a practice. Beyond cost issues, other details of the proposed order competition rule are of concern to market participants and will need to be ironed out. “The SEC has proposed obligations that will be so onerous for most introducing brokers that either a lot of firms will just say they're no longer going to pay or receive PFOF, or that payment will be significantly reduced because the call to go out and achieve best execution is more onerous,” said Nicholas Losurdo, Financial Services partner and former counsel at the SEC, while speaking with International Financial Law Review. “The more onerous it is, the more costly it will be to execute an order for wholesalers, and some of that cost will undoubtedly be passed on to end investors.”