FIA PTG sent a comment letter to the SEC today detailing concerns with the Transaction Fee Pilot for National Market System stocks. In addition to concerns about complexity and cost first raised in 2016, FIA PTG told the Commission that data gathered from the pilot will not only fail to provide insight into the order-routing behavior of those handling customer orders but could also be easily misinterpreted and lead the Commission to reach erroneous conclusions. In addition, FIA PTG raised concerns with the duration and scope of the Proposed Pilot, the handling of Exchange-Traded Products (ETPs), and the impact on holistic market structure reform, among other issues detailed in this letter.
"The Proposed Pilot, as designed, is not ideal for its stated goal. It will not facilitate analysis of how rebates impact the routing behavior of institutional investors," FIA PTG wrote. Even more troubling, the results could be misleading, and the public posting of this data could reveal valuable proprietary information. Moreover, the cost and complexity of this pilot raise serious concerns with its implementation. Equity market structure has become so complicated and tangled that pulling a single string through a pilot like this could create a Gordian knot that is impossible to untie. We strongly urge the Commission to reconsider this approach and instead focus on comprehensive market structure reform."