Well, i think we are potentially live once again folks in chat. If you can hear me they're trying to take us down, but i guess that's what happens when you ask questions about the scc? Let's see how this one goes round two. So if you missed the first one that was just taken down, we played the clip of mr chairman, gary gensler, with jon stewart episode, five of the problem and with that out of this entire episode, that was one particular snippet right there. That for good reason, at least in my humble opinion um, i would say it left a lot to be desired on the side of retail and it's pretty safe to say that the chairman is not an eighth so who i have here to discuss all this insanity With us, as you very well know, mr dave lauer he's the ceo of urban finance and the special guest of today is mr stephen sykes, the ceo of public, which is a brokerage that i'm personally very very happy to be a partner with so out of the Gate dave when you saw that now five times later, what's your initial, like gut because like when i say it was a lot of constraints like you could tell that he was like particularly picking each word and not trying to step on toes.

Am i making that up or do you think that the social media world has a right to be like? Ah, this is a little weird, so you know thanks for having me on matt, really, oh as always, i i appreciate it and i enjoy the conversations um. I i would say it's probably a bit: maybe unsettling for people who haven't sort of let's say met with a commissioner in person, for example, and then seen them speak in public and when a commissioner or the chair of the sec is speaking in public. Yet they have to be very meticulous about what they say. You have to remember right like that, can move markets um, and so i i don't believe that uh chair gensler was trying to be evasive or or anything like that.

You know, i think i i still remain convinced that he really wants to fix the issues uh, that he sees and generally that we agree upon. You know i i believe he is on the same side as as i am on many of these issues um. So you know, i i think it it didn't. You know there were parts of that interview that didn't come off great um and it's a shame, uh, and there were some things that he said that i uh very much disagree with.

In terms of you know how the sausage is made with legislation and the influence of lobbyists um. But you know that that aside uh, i do think that he's trying to figure out how to address a really big and fundamental issue in markets and an issue in that has been a fact of markets. Since bernie madoff and for a long time and and where many powerful firms make a lot of money, and that can be very difficult to change, especially you know for an agency which has congressional oversight and has people donating to congress. Uh, who don't want to see changes made so going off? Of that there are, i think, if people had the magic ability to wave them on, there would be many things that, like okay, many opinions i'll fix this fix.

This fix this, but fortunately we did have uh john's voice to kind of echo. One big thing, which was the extreme amount of off exchange trading, uh, inducements incentives, rebates and one of the biggest ones, is the business practice of payment for order flow. The idea of certain brokerages sending their orders to a retail wholesaler, such as the big players citadel and also virtu, now steven, i think you might be an expert in this particular area - is payment for order flow, bad yeah man thanks for uh, thanks for having me First of all, for anyone that doesn't know um uh public again, i'm the coo. I also run our broker dealer.

So if you ask me about gensler, i got to be a little more careful than dave, though, let's be honest, dave was pretty charitable there right, like pragmatic, dude being like. Oh all, right guys got a tough gig and i think we can all agree. Like he's. A pretty tough gig in this day and age you know he's used to having to balance all of the you know, republicans and democrats from congress, and now they got to deal with our lot coming at them, trying to think about raising a new voice in the Matter which is again unprecedented, he's got to deal with an entirely new constituency of people that care about his work and are vocal about it, and you know occasionally don't make him look the best on twitter.

That kind of sucks so he's really kind of trying to thread a needle there. So, anyway, i'm glad dave came in with a little more charitable, uh charitable point of view anyway. So anybody that doesn't know public investing app uh. We stand pretty simply for investors right.

We created an app ground up with a community built in helps people be better investors and a big part of that's aligning our business model around things that we believe ultimately are in the investors best interest and, like you said, matt. The first thing we had to get rid of payment for order flow and they're, like two big reasons for it: one and not everyone's gon na like this, but one the research shows when the vast, when, when all retail investors, the research shows the more they trade. The worse outcomes, they have right and listen. We all think we're great traders.

I've been there before trading options, losing money dave's been there before professionally my dad and anyway, we're not. You know we're not the best. That's why that's why dave's sitting here right anyway? Look we're not the best at it. So listen.

If i make my money as an app right, we all know how powerful technology is with things like facebook, uh we've, you know, we've seen sort of the impact that facebook and instagram can have on people's behaviors. If you put that technology behind a trading app or an investing app where their financial incentive is to get people to trade more like payment for order flow, what's gon na happen, people are gon na trade. More! That's not great right, especially when the evidence shows the more the broad market of retail investors, trade, the worse outcomes. They have the second thing, and this wasn't when we when we made this change like we made it more than a year ago, we made the change.

That was what we talked about. Those were our talking points: hey, listen, bad for retail investors to trade, more brokerages that have a financial incentive to get their customers to trade more, not going to be in great shape. But the second thing we had a hunch we didn't know for sure was that we could actually deliver better prices if we didn't take payment for overflow, and this is where things get a little bit crazy right. So every order that comes in for most brokerages the moment the moment matt hits buy right to buy one share of tesla in the market.

Based on that, the components that order most brokerages know where that's going right. Nobody has to compete for that order. It's already going to one of the big market makers, but there's no competition right. So it's entirely at the market maker's decision how what price to give matt on that share of tesla? Is it the bid? Is it the offer? Is it somewhere in between totally their call and every dollar extra? You know they every dollar less, they charge you for that trade right is more money for them, and so what we did was we flipped the whole thing literally starting a year ago, we're the first brokerage to do it.

We take every single order and we run it through the market and we try and find the best possible price in the market that very moment and what we found is after having done it for a year and by the way it took some optimization. It took some work. It took us building out a bunch of new infrastructure with a bunch of partners, but we were able to prove that we can deliver somewhere between call it. Almost a penny per share, better pricing for our customers on every single trade.

That's a that's, an enormous amount and that's that's relative to how we used to do before right when we were, we actually started our you know. We first started this business. We've only been around for two years. We first started our business.

We took the default, we did payment for overflow. We made the change a little more than a year ago. We compared to how we did it before and you know what we do about about a cent better than we used to, and then we look at our competitors right, i'm not going to name them right, so maybe dave can see him. We did the math and the math is very clear, like i said, almost a penny per share, better per trade relative to our customers, because we don't take payment for order flow and we try to find the best possible price at any given moment.

So it's pretty. I don't know it's pretty straightforward, all right, there's a clear conflict and it's such a huge number. It's a huge number. It's a huge number and like the number fluctuates sometimes it's 7 10.

Sometimes it's nine tenths, but it's like listen. Almost a penny per share and the crazy thing is: it's only getting it's only going up over time, and the funny thing is, if you had asked me uh you know going into it, could could public beat robin hood by a penny, a share on execution quality? You know by not taking payment for order flow. I would have said no way. I've said we need market wide change in order to realize the benefits of order by order competition and they've actually they've proven me wrong.

Thankfully, so i i just think that this outcome is so impressive um and it it helps to really make that case, like i said, inducements and incentives right. What are you incentivized to do as a company, and what do you therefore induce your customers to do uh in order to make your money and when you align your incentives with your customer, the outcomes are better and when you increase competition, the outcomes are better. This. This is like this should be.

This shouldn't be controversial in any way: yeah matt matt. Let me piss off the. Let me piss off the chat for a second, because i got to give credit where credit is due, so why were we able to do it right? How are we able to do this this quickly right? We changed market structure in a year. How are we able to do it because everyone's scared of of chair gensler right every industry's like if we get rid of payment for order flow? What are we gon na? Do and so literally, everyone is starting to like a line around other infrastructure, and so as we go to the market and we're like hey, we need better rails to execute retail orders.

You know what people say: yeah, let's do it. They see a huge market opportunity and a lot of that comes back to literally just the words leaving terry gonzalez mouth, and you know what like again, that wasn't the best interview i've ever seen, but, like dave said, he means well he's on our he's. On our side here and he's got a tough gig i'll tell you the only reason we've been able to move as quickly as we have and we've found such good partners and ultimately delivering this good execution. Quality is because he's he's created an umbrella.

We'd have a much harder time if we didn't have the big wide umbrella of the sec to operate on it. To be honest, now i think there's going to be a question. That's on a lot of retail traders and investors. Minds right now is before this um.

Let's look at some politicians on our favorite finance committee, the senators you have one who is at one point going to present a bill that literally would ban the outlaw of payment for order flow. You have another one who is saying that if you don't support um this setup of commission free, you're, actually racist, because we've seen a rise in minority training, and then we had some of our favorite media commentators saying you know who else doesn't have payment for order Flow north korea - now i don't know, maybe they do or don't seems like a bit of a red-hairing argument to me, but also canada, canada, yeah david moore statement, was definitely north korea yeah same thing. They're, like hey, doesn't have it and we don't want to be anything like that. Um yeah, i guess it's a form of entertainment, because it's one of those things that, if you don't laugh, you'll cry but with it a big question is we're hearing that from higher levels of media we're hearing that from higher levels of politics.

So a big question is like: well then, how the hell is it pulled off here because, like all we're told that is, if you don't want to pay for commissions, you have to do this, but it seems like you folks, at public have actually figured out a System in which, like hang on, not only are we pulling it off, but you're telling me that you're getting a pretty noteworthy amount of percentages actually executed at a better price yeah and the honest answer is like when you build this business uh. If you build it the right way, um payment for order flow is actually a pretty small revenue stream right. It's not that it's not that big. So it wasn't that big of a cost for us to go and say hey.

Let's get rid of this thing that really f's people over and let's find a better way and like guys, i'm no altruist here right, i'm trying we're trying to run a business trying to build a big one. We got a bunch of venture capital behind us. I got to make a real business out of it, and so we got to make decisions about how to build a brand, that people trust and the good news is when you do the right thing by your customers. You know it helps.

You grow yeah and again like you're proving it you don't need payment forward or flow for commission free trading. First of all and again in canada, we have the similar examples of commission free trading without payment for overflow. There are ways to do it. There are ways to make more money as your clients assets grow, which is a far better model than making your money based on.

You know, transaction volume and making your customers trade a lot. So if someone needed like a clear takeaway of this of like okay, it seems like hang on it's this big, like holy fight of what we're doing to make the market right. But let's say we weren't even doing it like in the name of fairness. If we were to look at it exclusively in numbers, the current setup is there a nominal value that we could apply to is that like payment for order flow is costing the average like market participant or like the world and market like this much money? Does that number exist? Oh man, you're gon na make me open a new tab.

I think stephen knows the answer to that question. Yeah there it is come on. I didn't do my homework anyway. I wrote an article in december uh and we posted it and actually bloomberg has some really good stats about sort of the the total the total cost um of payment for order flow.

We posted only. We only posted the one that breaks down sort of who gets the benefit of payment for overflow right and it's like 49 market makers, 13 brokers, 38 investors um anyway. Let me see if i can find that stat it's in it's like billions of dollars right. I think you're, looking at the market maker, share there, if i recall correctly about half of the total value it's about four billion dollars for market makers and that's that's the explicit number, but the practice of payment for order flow, which takes all of this trading that Everyone wants to face off against, which is why they're paying for it and takes it off, exchange that damages markets and the best study that i've seen on this issue has shown that it widens spreads by 25.

So that is a cost that everyone in the market has to pay. Retail is paying more. So even though they're getting price improvement, you know you're something went on sale and then you're paying. You know something was about to go on sale, so the price went up and then the sale brought it down a little bit.

That's what price improvement is like and for institutional asset managers they're paying the cost of that spread and most retail wealth is in mutual funds, pension plans and and etfs that have to transact and have to deal with those increased execution costs. So it's not just the explicit costs, as steven is saying, which are both the payments that should be going to retail that go to the retail brokers or the spread capture that should be going to retail that the market maker is getting. But it's also the idea that transaction costs as a whole for the market are increased and for something that it's just completely unnecessary to even get a good execution quality all right. So it sounds like overall, this costs multiple billions of dollars, which, whenever i hear a number that big, how do you even like internalize what that means? So maybe we could bring this back by playing a fun little game.

Dave, i'm going to read you a comment, and not only do i want your reaction to it, but i want you to tell me who you think said it: our markets have moved to zero commission, but it doesn't mean it's free, there's, still payment, underneath the applications And it doesn't mean it's always best execution. This speaker also noted that some troubling conflicts of interest remain. It was in october of 2021, so only a couple months ago, your reaction and who do you think said it. Oh yeah, i completely agree um and i think that's a good sort of succinct way of putting it.

I'm gon na guess that was gensler. It was ding ding, ding, one for dave and obviously for playing with dave steven. We have to play one with you. This was set in a couple months before that in august of 2021.

uh one of your competitors explicitly offered to accept less price improvement for its customers in exchange for receiving higher payment for order flow for itself. As a result, many of your competitors, customers shouldered the cost of inferior executions. These costs may have exceeded any savings. They have thought they'd gotten from zero commission once again, that was in august of 2021.

uh. I love your reaction and who do you think said that, oh man, i mean it's exactly it's exactly right, um. I think it comes there now who said it um hmm. Was it also gensler? It was one for one.

I don't know if we're ever gon na be able to break the slide, but my point in bringing these up one was august 2021. That was your statement and then dave. Yours was october 2021.. We are now in february of 2022 and to hear comments like that and then for the folks who are watching.

We did play the clip. Unfortunately, that was taken down. I see it one of two ways, in my opinion, as a retail person who i don't know, maybe i just like view the market be unicorns and rainbows when there's apparently some dark clouds that do exist in this system, i'm looking at it where i want it To be good, i like what it represents. It seems like right now it's one of the best vehicles we've ever created for upward financial mobility.

So i don't want that to be a farce. I want it to work, but what i don't get is when i see comments like that, and then i watch this interview, it's one of two things: it's either absurd lip service which is possible. I don't know, i'm not genser, i don't work at the sec or the other option is he's walking an absurd like razor, ridden tightrope and he's, i guess not trying to rock the boat and he's playing this absurd political chess match and he might want to just Be screaming out and be like hey it's this. That's stopping me from doing what i want to do.

Like don't yell at me on twitter, you got ta yell at this person and it could go either way. The three of us don't know, but like is there a third option, i'm missing, i guess from either of you on that one. No, i i don't think so. It's one of those yeah.

You know it's the second one right. I don't know dave said it before. Yeah, it's just it's like a really tough political tightrope he's walking. It is there's no easy answer.

We want there to be an easy answer and it's easy from the peanut gallery to say there's an easy answer, but you know this is why i i wasn't so hard on him when we opened this up, because you know comments like that. Tell me that he understands the issue right and that he knows what's going on and he wants to fix it and there have been other ones that were even stronger than that, especially focused on corporate concentration of power, and you know the duo. The off exchange duopoly. So i i believe, he's trying to figure it out and i believe there's a lot of pushback on that and that's you know, maybe a good and if, if i didn't think he was a good honest player, i would have called him out that and and so Because i think he's trying to figure it out, you know i'm not ready to turn uh and change my opinion just yet, but i do think - and you know maybe this is a good chance to talk about this.

We, the investors movement that uh he needs some cover, he needs help and he needs to be able to show that individual investors understand the issue and that they're not represented by citadel and robin hood and virtue and schwab, and e-trade that they're they can represent themselves. They understand the problems in the market, they demand best execution, not good enough execution, and so what we're trying to do is start this grassroots advocacy campaign to give him that cover to file the comment, letters to call congress to show that people care about these issues And that they support him in his efforts to get rid of payment for order flow and curtail off exchange trading, and so you know i, i think, that's the answer, and i think that this is the attention on the issue. Thanks to the jon stewart show and now and thanks to the hbo documentary, hopefully will let us bring even more people into this conversation, educate them to understand what the issues are and then empower them to advocate for themselves. So if i were just to dumb this down into like, let's say just a way that a simple ape like myself could understand it are you thinking that we just need to give a little bit of an opportunity for him to make a comment or a bill Or whatever he has to do from a regular regulatory standpoint, and we see that publicly, you think we just need to make an uproar as long as the public and the populist movement is in support of something that ideally, he says and or does to really truly Protect it because, like another big one, when i was gon na play that game with you guys was like so many comments about trust.

It seems like his biggest thing is we need people to trust the system, so if he does something, and for like lack of a better term that shows okay he's trying to build up trust. Are you thinking right now and just for everyone? So you know the websites on the bottom here. If you want to read more about the specific details, do you think that's the golden answer? Is he does something we like make? Everyone know that we like it like make it so the politicians like there it would be absurd for them to not know that we support it yeah. Exactly that i mean that's.

How change will get done right it? It will come from the sec, proposing a rule. Uh to change how the current system works and we want you know i wanted him to do that by the end of last year. That's when i thought it was coming and it's gotten delayed and delayed, and you know now there are other things on the agenda as well, and so what i think our best course of action is is to call congress. Let them know this is a priority that pressure will filter down and we're going also uh later this week, we're going to launch a campaign to send a letter with as many thousands of signers as we can get on it directly to gary gensler.

To say we care about this issue and we want action on it, and this should be a priority and then hopefully, when we get the rule proposal that we want and that's when we unleash the comments, and we show him again that there's support for what he's Trying to do and that people who are commenting understand it and they understand it well enough to push back against the the internalizers and the wholesalers and the discount brokers that are going to hold themselves out as representing retail and push for keeping and maintaining the status Quo awesome, uh stephen. I just want to follow up with you like, on top of that, i'm sure you've looked through this website and once again everyone check it out. It's in the bottom left. We dash the dash investors.org.

It's going to be a lot more of the copyright related to this, like maybe the key facts of what you need to know and beyond that, how to reach out who to reach out lots of great information check it out. It's in the bottom left, but uh stephen. I want to give that to you of just any other follow-up of what you would view retail's best way to get our voice heard, magnified whatever you want to call it yeah. I mean we're in the golden age of retail investors right: we've had like 25 million new retail investors come to market in like the last year right, and it's only evidence that, like i mean look dave, i ask you this every time we talk how many twitter Followers do you have now dave, i'm getting close to 90 000, and all i do is talk of about market, about market structure right retail investors when somebody's gon na advocate for them.

That's incredible right. The impact that we can have as a group advocating for our interests and for retail and individual investors best interest in the market. It's huge, it's huge and it's bipartisan right. Everyone wants retail investors to be successful again.

Retail investors and the people that are harmed here by the existing market structure are again pension funds, mutual funds exchange, traded funds, individual investors right, it's, the entire market. There's no party divide here now again, you'll see evidence of a party divide, but there's no party divided here. This should be a bipartisan issue. We should have an easy, easy cat path again.

If we can't get it done through the sec. We have an easy path at congress and unfortunately, like dave alluded to that, that's not totally the case for the sec today and you'll see the next time. Chair, gentler goes on the hill he's got he's got to fight, he's, got to fight a bunch of battles. Up there, but the best thing we can do is advocate directly to our legislators for the change that we want to see and again that's why we're excited to support to support dave and the we, the investors uh advocacy org, as is again just to create the Infrastructure and education required for retail investors to help drive change and uh again get as many of those people behind us as we can man on a personal note, obviously, with the insanity of gamestop in january of 2021, that was unbeknown to me.

The first bit of traction that ended up leading to various brokerages taking away the buy button, and it got like to a certain level where we got traction. But it now feels like we're getting our second wing and maybe i'm just being a little naive. A little optimistic, but it feels like we have something going so folks, if you haven't already share this with a friend, tell someone just to explain it where we have this source right here, that people can check out for themselves and let know like really what's going On and now here i'm gon na drop um your all for both of you how people can kind of reach out uh there's both of their twitters, make sure you follow them. It sounds like dave's close to 90., so folks, if you're watching this right now get him to 90..

It's what he needs at this moment, but overall um. So that's your twitter's is there beyond it? Do you guys have anything else like if they want to reach out to you or a piece of information or is the twitter and your tags and all that enough? No listen. We listen we're a fast growing company, i love being on twitter, and so dm me hit me up. If you have any any questions about public or the way we do business, we try to be out in the community both on twitter and then within the public.

App like here to help hit us up great anything from you dave final thoughts. No, i mean you know. I say it every time that it's it's incredibly exciting to me that this many people care about market structure and still shocking uh, as it is for many people that i know um. But you know it.

I i think the the one thing i would leave it at is that you know i understand it's frustrating that the change hasn't happened yet, and we all think that it's common sense and so obvious and needs to happen right away uh. But it's a long term fight and if people stick around, i think john said it really well uh in the in the twitter space he's like they're, counting on you to not have the stamina and they're counting on you to not stick around for the fight because They can wait you out and they can delay and delay, and - and so you know, that's what the community and the inve retail investors need to do. They need to stick with this and it's going to be a long fight, but i think we'll win in the end, if we can all sort of stay focused and stay involved and and make our voices heard, and so i'm excited to be part of that vote With your feet and your dollars come on go check out public they're by far the most uh transparent broker. I've ever seen awesome well, thank you both of you so much and for everyone who listened to this.

I truly truly appreciate your time, but remember this is just the next step in a crazy journey that will most likely last a while. That's how regulations and rules and laws all this works, but remember when the time comes and the voice needs to be heard from the community. I personally ask of you - and i know these two gentlemen - definitely ask if you make sure your voice is actually heard because that's how changes happen but overall, thank you so much and i have hope you have an absolutely beautiful day, i'll catch you later.