Schwab, NYSE and Citadel Unite Against SEC Market-Rules Revamp

They also called on the agency to withdraw a proposal requiring many more equity orders to be sent to an auction mechanism. “At a minimum, the proposal should be indefinitely paused” until the execution-quality impact of other suggested changes is known, they wrote.

‘Best Execution’

Another proposal would force broker-dealers for all assets, including fixed-income and options, to obtain “best execution” on their clients’ trades. That measure would create an SEC-specific rule for the industry, which currently operates under guidelines and rules set by the Financial Industry Regulatory Authority, an industry-backed watchdog.

That proposal should also be withdrawn, according to the NYSE, Citadel Securities and Schwab. “We are concerned that the current best execution proposal, with overly prescriptive and impractical requirements for managing a new category of so-called ‘conflicted transactions’ may unnecessarily disrupt decades of market progress for investors,” they said.

The joint letter should be taken “in the spirit of compromise and collective progress — to ensure the “gold standard” status of our markets is maintained,” NYSE president Lynn Martin said in a website post Monday.

In an emailed statement, Schwab said it was still reviewing the four proposals and their “likely impact” on clients. It said it “will offer additional comments for the commission’s consideration in the near future.”

(Photo: Jin Lee/Bloomberg)