James David Coker Comment On Regulatory Notice 22-17
Sir, While I appreciate the level of market transparency you are trying to achieve by implementing rules that speed up the price reporting process, I question the benefit that market participants will enjoy by shortening the reporting time frame from 15 minutes to 1 minute. I think this is especially the case with smaller trades done typically by retail investors. Our firm usually does government bond trades (i.e. Treasury Bills) as a service to our retail customers. We do not charge a markup or commission to execute these trades for those customers via our clearing firm. The executions we receive for those customers is good, usually within 1 or 2 basis points of the round lot market even for smaller trades of $25,000 to $250,000 in value. We monitor monthly reports provided by FINRA regarding TRACE quality of execution and reporting timeliness and if an issue arises, we investigate the causes. While issues are relatively rare, they happen. Timeliness of reporting is the most common problem and is usually the result of a technology issue either at our clearing firm or with TRACE itself. I worry that shortening the time frame from 15 minutes to 1 minute will increase the number of issues and the amount of time necessary to investigate and resolve issues. More such time increases costs for everyone thus causing our firm to question whether or not providing such execution services to retail investors who I believe are served well now. I would urge you to consider continuing the 15 minute TRACE reporting time frame for smaller trades, say less than $1,000,000 face amount and perhaps using the 1 minute TRACE reporting time frame for trades of over $1,000,000. Perhaps that would provide the market transparency you desire while also proving a more timely reference point for retail investors.