Apex Comments on SEC Chair’s Vision

Apex Fintech Solutions welcomes Chairman Gensler’s call for improvements in stock trading procedures to help raise returns for retail investors and lower cost of capital for public companies by reducing excessive market segmentation and increasing competition. In particular, we support, and are fully ready to implement, pending SEC approval, a trading solution based on high-powered auction technology to maximize competition for every retail order.

AFS currently enables more than 22 million retail accounts in the United States. We also facilitate hundreds of thousands of automated institutional sub-second auctions each trading day. Helping to maximize competition for every single retail order, which includes marrying retail with institutional trading within a transparent structure that provides best execution without relying on mere pledges to search for it with “reasonable diligence,” is a long-overdue reform that we embrace as a matter of both regulatory principle and business logic.

Since the elimination of fixed commissions in the 1970s, retail trading has become vastly less costly. Zero-commission trading is now the norm. Still, the present structure of our equity markets remains an inefficient remnant of the pre-computer days. Auction technology, in contrast, batches multiple orders so that all prices can be compared simultaneously before the best one is selected. Doing so helps to ensure that trading costs are minimized, and investment returns can be maximized, by grouping orders, in real-time.

Tight spreads are good, but no spreads are best. Although there is much to celebrate about the current state of retail trading, the need to guess at best execution with “reasonable diligence” applied to selecting counterparties without knowing exactly what price is being offered is a costly and unnecessary feature of an antiquated market structure. We therefore support the SEC’s efforts to effect such modernization in a manner which allows brokers and wholesalers to compete for the orders of retail and institutional traders — to the benefit of both — and we invite all industry participants to join us in collaborating to preserve the most beneficial elements of the current structure while simultaneously raising the bar of competition and transparency to a new standard.

This blog reflects the opinions of the author.

Important disclosure: Securities products and services are offered by Apex Clearing Corporation. Cryptocurrency products and services are offered by Apex Crypto LLC. The information contained herein is provided for informational purposes only. This information is designed to assist you with your business and is not representative of issues or risks generally or specifically known within the financial industry or any business in particular. Apex Fintech Solutions is not engaged in the business of rendering consulting, legal, accounting or compliance advice. If you require such services, a professional in such matters should be contacted. This information may not be reproduced or distributed, in whole or in part, without the express prior written consent of Apex Fintech Solutions. Further, the information herein is subject to change without notice.

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