Subject: Urgent: Oppose Defunding SEC's Market Structure Reforms in Appropriations Bill

    Dear [Congress Member's Name],

    I trust this message finds you well, and I appreciate your commitment to serving the best interests of our nation.

    As an active investor within our financial markets, I am writing to urgently express my opposition to the proposed rider aiming to defund the Securities and Exchange Commission's (SEC) ongoing efforts to reform equity market structure, including regulations Best Execution (Best Ex), Order Competition Rule (OCR), and National Market System (NMS).

    These proposed rules are not just regulatory nuances; they represent a fundamental step toward modernizing our markets, fostering competition, and reducing concentration. However, I firmly believe they are just the beginning of the comprehensive overhaul our markets urgently need.

    I implore you to consider the significance of prioritizing market structure reform, ensuring that the SEC is adequately funded to fulfill its critical role in safeguarding the integrity and fairness of our financial markets.

    Recent proposals, which have garnered substantial support from investors like myself, include:

    Order Competition Rule (File No. S7-31-22; Release No. 34-96495):

    This rule is pivotal in dismantling monopolistic practices that currently grant undue control over stock prices to certain entities, such as Citadel. By advocating for a public auction system, this rule ensures equal opportunities for all market participants and fosters genuine competition.

    Tick Size Rule (File No. S7-30-22; Release No. 34-96494):

    The proposed Tick Size Rule aims to level the playing field, enabling all market participants to trade at sub-penny intervals. This move eliminates the unfair advantage held by specific entities and reduces the impact of payment for order flow, promoting fair competition and enhancing market integrity.

    Regulation Best Execution (File No. S7-32-22; Release No. 34-96496):

    The Regulation Best Execution proposal is fundamental to ensuring market transparency and fairness. By establishing consistent rules across trading platforms, the rule prevents biased actions by brokers and wholesalers, fostering honesty and transparency in stock transactions.

    Disclosure of Order Execution Information (File No. S7-29-22; Release No. 34-96493):

    Addressing concerns related to selective price improvement, this rule mandates increased transparency and disclosure of order execution practices. By preventing deceptive behavior, the rule protects against unethical market practices, contributing to overall market stability.

    Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions (File No. S7-32-10)

    The S7-32-10 regulatory proposal targets security-based swaps to prevent fraud and manipulation. Rules like 9j-1 prohibit using non-public information to evade liability and manipulating swap prices. Rule 15Fh-4(c) makes it illegal for SBS Entity personnel to influence the Chief Compliance Officer fraudulently. Rule 10B-1 mandates reporting large swap positions based on gross notional amounts, emphasizing transparency. If swaps aren't outlawed, full and immediate public reporting is suggested. The aim is to inform regulators and the public, reducing information gaps and promoting market integrity. The proposal includes reporting thresholds for Credit Default Swaps and stresses not netting positions against underlying debt securities.

    Implementing such rules will be advantageous as they dismantle monopolistic practices, level the playing field, ensure market transparency, and protect against unethical practices, contributing to overall market stability and integrity as part of the SEC's ongoing efforts in market reform.

    The primary goal on behalf of shareholders worldwide, including both U.S.-based and international investors with holdings in U.S. markets, is to strongly advocate for a comprehensive overhaul of these markets. This advocacy emphasizes the principles of transparency, equality, and accountability. As investors, we are invested not only in financial returns but also in the principles that govern fair and ethical market practices.

    We implore you, as our congress elects to assist us in this. It is crucial that Congress prioritizes market structure reform, allocates the necessary funding to the SEC, and supports these proposed rules that are essential for the well-being of our financial markets.

    Defunding the market reform taskforce, a critical component of the Securities and Exchange Commission (SEC), would not only undermine confidence in our domestic markets but also pose severe risks to the stability of the global financial landscape. The SEC plays a pivotal role as a government agency responsible for regulating and overseeing the securities industry, and its functions are integral to maintaining fair, transparent, and efficient markets.

    The SEC is entrusted with the responsibility of enforcing federal securities laws, ensuring that market participants adhere to rules that protect investors, maintain fair and efficient markets, and facilitate capital formation. Market reform initiatives, such as those currently underway, are vital for adapting to the evolving dynamics of the financial landscape, addressing emerging challenges, and fostering innovation while safeguarding against potential abuses.

    Should the SEC's market reform efforts face a funding setback, the consequences could be profound. Firstly, the loss of confidence in our markets could result in diminished investor trust, discouraging participation and investment. This downturn in market confidence could have a cascading effect on the broader economy, impacting job creation, economic growth, and the overall financial well-being of individuals and businesses.

    Moreover, on the global stage, the SEC is often regarded as a standard-setter for regulatory practices. A weakened SEC, hindered by insufficient funding, would not only impede its ability to enforce existing regulations but also limit its capacity to adapt to emerging global financial challenges. This, in turn, could jeopardize the value of the U.S. dollar, as global investors may seek more stable and regulated markets elsewhere, affecting currency exchange rates and potentially triggering financial instability on an international scale.

    Furthermore, the SEC plays a crucial role in protecting market participants from predatory practices, including those orchestrated by bad actors such as short sellers. Market exploitation, if left unchecked due to insufficient regulatory oversight, could lead to manipulative activities that undermine the integrity of our financial markets. This, in the long run, could result in a skewed playing field where the interests of a few outweigh the broader market, ultimately harming the very investors the SEC is mandated to protect.

    Incidentally - appreciation is wholly deserved to Chairman Gensler who has demonstrated an admirable commitment to prioritizing the interests of retail investors and driving meaningful market reforms as the head of the SEC. His dedication is both commendable and refreshing. As investors, we wholeheartedly support Chairman Gensler's efforts to inspire positive change in the market. We appreciate his proactive approach to advocating for the best interests of shareholders and eagerly anticipate witnessing his continued leadership in safeguarding and enhancing our financial markets. It is vital that Congress recognizes the value Chairman Gensler brings to the SEC and supports initiatives under his guidance.

    In conclusion, defunding the SEC's market reform initiatives would not only compromise the agency's ability to regulate and reform our markets but also set in motion a series of events that could erode investor confidence, destabilize the U.S. dollar, and reverberate across the global financial system. Maintaining a well-funded and effective SEC is not just a matter of domestic concern but is integral to upholding the principles of fairness, transparency, and accountability that underpin the functioning of modern financial markets.

    I trust you will consider the broader implications of these reforms and advocate for the protection, accountability, and transparency that our financial markets urgently require.

    Thank you for your attention to this matter, and I look forward to your continued dedication to the well-being of our financial system.

    Sincerely,

    [APE]