Thread by @dlauer

I can confirm I've heard similar things as has been reported publicly - the SEC is moving towards a Dec 14 vote on a proposal that will be the biggest overhaul of markets since Reg NMS in 2005. Here's what I think this will look like. 🧵

The proposal sounds comprehensive, w/ 6 main parts: Best Execution, Retail Auctions, Rule 605 Reform, Tick Increment Changes and Harmonization, NBBO Reform and Market Data changes. This lines up with what @GaryGensler has said publicly for the past 6 months since his June speech.

@GaryGensler The best execution changes should include an order-by-order standard. This strikes at the heart of current PFOF brokers/internalizers, who only focus on aggregate execution quality (& still fail to achieve best ex). That's why you see so many 1 mil PI fills - to juice the stats.

@GaryGensler Forcing retail brokers to focus on order-by-order execution quality will force them to seek better alternatives. Those alternatives will be required to be competitive - that's what the retail auctions will be. I don't have details on what this will look like, so hard to judge.

@GaryGensler If auctions are well designed and highly competitive, research suggests there could be positive spillover effects into the broader market. These auctions will take place on exchange, not off, so that alone should represent a big win for both retail and market quality in general.

@GaryGensler However, if these auctions are fragmented across exchanges, difficult for diverse participants to engage with, or modeled after options market price improvement mechanisms - then I'll be much less optimistic on the impacts. I'll have a lot more to say on this in the future.

@GaryGensler Rule 605 reform - venue/broker execution quality disclosures - is LONG overdue. This is an issue I've been pushing for over 10 years now, even submitted a detailed proposal to SEC with metrics to include. This is often overlooked, but a disclosure that can have real impact.

@GaryGensler Tick size reform is something we emphasized to @GaryGensler in our meeting with him - it will help to give similar price improvement opportunities on-exchange and help to level the playing field. Current regulation is designed to advantage wholesalers - we need to end that.

@GaryGensler For tick sizes (current 1 penny on exchange), I hope they'll take it down to half a penny for tick-constrained names, and either leave alone the other names or widen the increments. This is an area I expect #WeTheInvestors to focus on in our comment letter.

@GaryGensler The other two changes will be to improve the NBBO (include odd lots and other similar changes) and accelerate some of the market data reforms that have already been approved. These are both important and valuable changes.

@GaryGensler So many of you have been frustrated w/ slow pace of change for these proposals - believe me I understand, I've been working on these issues for a long time. That said, change is finally here - change that should make markets more fair and push retail trading out of the dark.

@GaryGensler I'm a strong believer that individual investors getting involved in this debate in an unprecedented way is making a HUGE difference. Not only that, but we have a strong seat at the table - we have called for many of these reforms, and are seen as a neutral party by the SEC.

@GaryGensler For too long, the wholesalers and PFOF brokers have "represented retail" - NO MORE. This is not the time to pull away or dismiss the SEC's efforts. Believe me, that's what these firms want you to do! When you’re cynical - they win. When we fight together - they can’t stop us.

@GaryGensler They want retail investors fighting & disagreeing with each other, being as disorganized as possible. Every time the SEC or Gensler are dismissed, the wholesalers and PFOF brokers celebrate. This is the time to double down, push harder & make sure markets are reformed properly.

@GaryGensler You can join our efforts to continue to push the SEC on these and other changes, either on the main website: urvin.finance/advocacy

Or with our most recent sign-on letter: urvin.finance/advocacy/we-th…

Next week we'll host an AMA Twitter Space to discuss all of this!