Foreign, Foreign Foreign. Thank you Thank you Foreign! We are about to listen to the Chairman of the SEC Mr Gary Gensler Talk about Ftd's talk about DRS and the lack of transparency in the market, the conflicts of interest that we have from payment for order flow and market makers such as Citadel Securities and virtue and this will all be hosted by and the person asking the questions is going to be Mr Dave Lauer a person who's been on this channel many, many times before. I Highly recommend that you listen to our previous interviews with him. He's a man.

I Very much respect and he also happens to be incredibly knowledgeable about Market structure which is one of those things that is almost intentionally complex, intentionally obtuse. Uh, just to prompt more complexity and confuse people and make people kind of just be like ah, this seems messed up I'm not going to ask any questions, but as we saw recently from Gary Gensler the chairman of the SEC, he literally just posted a video about how year over year in an annual basis 1.5 billion. That's billion with a B 1.5 billion dollars is basically stolen from retail Traders and investors because of certain practices that go on. and it's one of those things where people just kind of don't even know about it and it gets voted on, It gets approved and the world continues and we're not much the wiser.

And then there's a subset of people like Dave Lauer who screamed to the High Heavens And it wasn't until recently the craziness of the ape movement with GameStop that finally more people joined the fight. More people really took a stand against all this craziness that we see in Wall Street Now I'm not saying this is the only crazy stuff that happens in Wall Street but it's definitely important. Definitely definitely important. Now this should be starting in a mere three minutes.

so if you're not watching this live, feel free to just forward to that. But if you are watching it live, if you guys could help me out, it would be a great great benefit if you guys could all hit that like button. It does help with the battle Leaderboard on Rumble and it helps out with the algorithm on YouTube Um, we've done a lot of content today, so I think the notifications are all wonky. so uh, please, like subscribe.

It gets more people in here to pay attention to things that maybe it's not the most fun thing to discuss, but it has a vast, vast impact on our life because this is really what controls the financial sector. so it controls retirement accounts Pension funds your individual brokerage account. It really has a massive, massive impact I Understand that sometimes it can be a little bit dry and that's why we try to lighten it up with some jokes here and there. but I'm ready to go I'm ready to go I'm ready to go.

so don't forget to like, don't forget to subscribe. And if you want to be an awesome goonie member to celebrate this crazy Wednesday in the market, it would be great if you could share it on other forms of social media as well. So they should be talking very, very soon. I have my reminder and everything set.

So in the meantime, uh, here we go here. We go. Okay, waiting on the YouTube channel. Tune in.

Okay, um, if you want to know the website, the Twitter and their YouTube page is all in the description of the video. Once again, their website, their Twitter page, and their YouTube channel all in the description of the video. and I'm talking about we the Investors which is the organization that Dave flowers a part of. but it's also run with a group of other pretty amazing people who are just trying to make the world a little bit more ripe.

But if you want to check it out, it is we. Dash The Dash Investors.org You could just Google we the investors. but they are the group that is responsible for all these letter campaigns, the proper commenting period. Uh, they've done really cool stuff.

There's other shiesty people in this who are like, yeah, let's do a protest, Let's hire this or let's do that. They're all full of it. This is the one real organization that it has some semblance of. You know, authenticity.

People who know what They're talking about. kind of not like all these other ones. They just have like kind of a sheisty Vibe of like give me money and I'll help you do stuff for some reason like it's just super super weird. But anyway, these are the people I Definitely listen to.

These are the people that I definitely respect. These are the people who, let's be honest, just actually know what they're talking about. So this should be getting underway momentarily. Um, to pass the time a little bit.

I Thought that this might be of a little bit utility I Wanted to give everyone an update on my positions, especially from this morning. As you can see, um I Finally figured out how to make the font bigger. So on the Weeble account, which, uh, commission free options trading. obviously there's some other regulatory fees, but you're never going to be able to avoid that anyway.

a spy credit spread, a Q Credit spread, a coin credit spread, and a Tesla credit spread thus far. uh, the Spy credit spread is making money I got in at 40 down to 35. remember credit spread I want this to Decay to zero I was credited 40 cents and I'm gonna have to eventually buy it back and the closer I could buy it back to zero, the better it is. So we're already up 10 on that one in terms of the cues.

I'm in at 38, they're trading at 38 So that's net net right now. in terms of coin. Uh, it's at I sold at 50, it's down to 34. So I'm making some money there.

And finally, Tesla I'm in at 27 and it is currently at 35. so a little bit under that. Um, the account started with ten thousand eighty dollars and we're currently up to ten thousand, one hundred and thirty six to forty dollars. So um, we're up money today.

I'm not saying it's like amazing. like jaw dropping money, but slow and steady. Is How We Do It So that's for one account and the account that I'm slowly transitioning out of just because it has more commissions I have another Mpw 14 by 16 spread. Uh, that one's currently uh money in terms of Cues I'm up money there I have March 3rd, 309 by 310, and 315 by 316.

obviously that's up money currently up. uh 11.50 on the first, 142 on the second one. In terms of the Spy I have a lot going on here I have one, two, three, four different spreads going on. I believe they're actually all up money.

they are up and one I was able to take the profits on today. so three live ones there Tesla I am where are we at on this one? Uh, down, five break even on one the other one I got out of. The only thing messing me up today is my directional Tesla put if I didn't have this directional teslait I'm in at 785. Uh, it's at 490 right now.

so I'm down on that. But all the credit spread plays have been working out beautifully. You sold those uncovereds? No, they're call Credit spreads. Uh, Uncovered now.

Uh, selling naked Calls Selling naked puts. You can do it. but most brokerages don't allow you to participate in such a thing. All right, let's see if we can get going here.

When is this starting? When is this starting? I Keep reloading Twitter to get into the Twitter space. Call: when are they starting this in one hour? Listen. Live. Join the space.

All right I Don't think anyone's talking quite yet I Think we're just probably waiting for Genzler to join. But as you can see, um Dave Lauer's hosting Alex These are the guys with we in the vesters Dave and Alex really cool people and I believe the main premise of this one. Uh, let me read what Genzler was talking about. Uh, we will be discussing Equity Market Structure I Believe there we can drive greater efficiency, competition, and fairness in our Equity markets.

Our Lives discussion. We'll be starting great and then I Just want to read you guys, is it getting going? Is that there we go? Take two? All right? Um yeah. I Think you must have the YouTube stream open in a tab or the Twitter space. So here we go.

Um we the investors again is uh, thrilled to convene this second uh Q a session with SEC Chair Gary Gensler Um, We the Investors is a Grassroots advocacy organization and we are focused on uh, improving transparency in markets um improving competition, increasing Uh in individual investor participation in markets and we're thrilled to have you here joining us for a second session. Uh Chair Gensler So thank you for for doing this. Dave Thank you and thanks. Yeah, Um, so you know we're just gonna Dive Right In I Think the last time that we met, there was a lot of ground that we had to cover a lot of Basics that we had to get past.

Um, this time we're going to jump into some detailed questions. Um, so I I Wanted to start just by giving everyone an overview of what we're going to talk about because um, unless uh, you stick around for the whole thing, you might not realize that there are some topics that we've covered. So um, we're going to start out by talking about an issue in markets that we know a lot of people care about, which is Ftd's failures to deliver. Um.

then we're going to have a conversation about direct registration, the DRS system and how retail and individual investors are choosing uh to move their shares out of their Brokers and into their own names to have that direct relationship with the companies that they're investing in. We're going to talk about some of the new SEC proposals that have come out some very transformative rules that I know that you uh, spearheaded and ones that will really fundamentally change some some things about markets especially especially in terms of that pipeline for retail investors where you have off exchange trading, wholesalers and internalization and a lack of competition for that off exchange trading space and a lack of an impairment to the price Discovery process. Because of it, we'll talk about some of the reg Nms changes to tick sizes best execution. We're going to want to talk a bit about some.

you know how the SEC approaches enforcement and you know the the kind of feedback that we hear and then we'll see if we have more time to talk about about other things. It's pretty a pretty big uh you know plate that we've got here. Um so but to start I did want to ask you just real quickly. Um I A lot of people ask me to ask you about a stock that they care about a lot.

You know everyone has their stock, many people have multiple ones. Um, it. If I were to ask you about a specific company, um you know what would be your reaction. Would you be able to talk about the situation that a specific company or a specific trading activity in an individual stock s We are for two reasons like the card for Us President companies.

One is we're very much a disclosure-based agency. We're focused on making sure that we protect the investing public against fraud, manipulation and our rules are followed and the like. Secondly, we're also a law enforcement agency that brings about 760 uh, law enforcement actions a year, civil law enforcement actions, and so we don't really talk about any one company in that context either. Um, so I hope that helps you.

But uh, we can talk about policy. We can talk generally about the the uh, the functioning of the market. They don't comment on individual ones. No, I understand and and I think maybe that that's not in, you know 100 clear to people in terms of you know the way they think we should approach these things and that's fine.

Um, but you know I respect that and I think that it's more interesting to talk about Market structure and and the changes that you're trying to push. Say that you've got a question or some of your viewers that they can make it more generic about what the Securities and Exchange on the market we learned and not just me in this call, but the people at the Securities and Exchange Commission that helps prepare me for the call, but are listening now to this dialogue and thinking about it. We'll look at the transcript later. We actually even prepare me for the call, but are listening now I Didn't even realize better audio over here.

All right, thank you! So you are part of the administrative record my friend. Um, all right. So to add to that administrative record I'm excited to bring up Platinum Sparkles to ask our our first question. Hello good to see you Platinum Hi good to see you again Thank you for joining us! So on Platinum from Super stock on Reddit Uh We recently asked the community for questions for you and the overwhelming majority.

I have questions about Ftds and why they're allowed to exist. Um, so register is set out to reduce Fdds and limit how long an FTD can persist. but there are loopholes and people are concerned that these loopholes are being exploited. Why are Ftds allowed in modern electronic markets and what do you think is causing millions of Ftds per day? Okay, I I Think you all I raised An important question fails to deliver I Mean the history comes from, uh, a paper world where you might literally, uh, show up, uh, to do a transaction and be unable to settle the transaction.

But you're right. in an electronic modern era, you would say, what, what is this about? why would this still occur that you might quote fail to be able to deliver? Uh, the security. Uh, I Think we're doing a number of things to lessen that to lower that even this rule that we finalized a week or two ago about shortening the settlement cycle from two days to one day. we added something else we said on the same day that a trade happens the very same day that you have to what's called affirm, confirm, and even allocate the transactions electronically that day as soon as technologically practical.

We did something in addition that didn't get much press about what's called straight through processing so that the all the electronic pipes connect. but I Share your thought that uh, in the modern digital age you you would really think this would be at most a de minimis thing that happens because of some electronic glitches. yeah, he talked a lot without answering anything nefariously. Do you think they're they're being this, that these loopholes are being purposefully exploited I Think that uh, you raise a good question Dave And that's really the question that I think is at the heart of probably many of the Uh contributors is like if it's just an error, it's just an error.

That's one thing. But is there any manipulative action? and that's really what our enforcement division the 1300 Professionals in our enforcement divisions from time to time have to think about. The the actual statistics are that it's a very small number of fails to deliver. Not small in in numbers, but small as a percentage of the daily trading.

I Mean because there's such big numbers of daily trading? Um, but your question is the right question is is like might there be anything that's uh, manipulative And even if the vast majority of Trades deliver properly, those fails, deliver. Maybe the vast majority of those we don't. I'm not saying this. uh to get anybody off the hook because anybody that's using manipulation around this, then uh, needs to be held accountable.

Do you think though that um, and maybe this is getting two in the Wheats But um, the the Nscc netting process could result in the understatement of the actual incidence of Ftds. Um, so you know we I've heard different numbers I've heard one percent or so of all trades in equities uh, fail or three to five percent maybe overall in the market although I think that's dominated by ETFs Um, but if the netting process is something where it, it's actually sort of hiding or obfuscating. The actual incidence of fails. Is that a problem? Well, I Think transparency is really important in each part of our markets, including in this time, geared up to give all the political answers.

It might be something that you'd even want to follow up and talk to our folks directly in the division of trading and markets. Uh, and and not isolate it just to this call. But the statistics that have been shared with me are closer to that one percent. But maybe there are statistics that you want to point out to us and we'd learn from that.

It would be really helpful. Sorry Platinum Was there was there anything else you wanted to follow up on? Well, last time you did say because you kind of mentioned it right now that there's a way that's existed for decades to file something with the SEC If there's a specific thing we think that should happen, so is that what you're talking about? And if so, what, What is it? What is the way? um I was actually talking about actually having a meeting. Oh okay, I was thinking more. uh, but there are ways you're absolutely right.

Platinum there are ways to file. In essence, um, a request that we do rulemaking or requests that we do certain things. There's also in our enforcement side tips, complaints and referrals and whistleblowers there are many ways there. but I was just suggesting if there was specific uh, statistics or a research paper or something.

Platinum you could send it to us, but also uh to to meet with the staff our staff meets with uh Market participants they benefit, meeting with some of the folks that are, uh, like yourself in in this call. Awesome. All right. Thank you.

All right thanks Platinum appreciate it. Um, okay, so uh, before now before we jump into DRS uh well. I guess jumping into DRS before we bring anyone else up. Um, we sent you that comprehensive packet that was put together by members of the community.

um I'm curious. Just to start off with, you know, in terms of direct registration, what did you think of that and and what are your overall thoughts on it? Wait, this. uh I think, is this the letter that you're referencing that Um has 36 more days, Uh, for signatures and and then some related material to yeah, it's so right we're We're actively running this petition under we the Investors to to deal with some of these issues. and then yeah, the the supplemental material that we sent over.

uh, specifically on Direct registration. So so let me step back from the letter because it's going to be a petition. and back to Platinum's question. Those are things petitions are actually, you know, formally sent in and considered.

But in terms of direct registration. um, it's something that's allowed right now. In fact, it's not just allowed, it's facilitated by various rules of the Securities and Exchange Commission dating back at least to the 1990s. Um, of course, in the paper-based days uh, and I even Remember this as a kid, my father never had a bunch of money, but when he would buy 50 or 100 shares of stock, he'd get that physical certificate.

He would take it into the bank and put it in his uh, safe deposit box. Uh, literally. but electronically you can still do that. And and we actually have mechanisms that allow for that in our in our rules and laws these days.

Um, so for those investors that feel they'd prefer that for the various reasons as you've laid out, um, that's uh, available in uh, the current system, right? and so uh, so let me just. I'll bring up Paul Khan Um so Paul Khan from Computershare Uh, who operates I I Guess you know the largest transfer agent and the the largest direct registration system Um out there. So thanks for joining us! Paul Thank you Dave Thank you very much and good afternoon Chair Again, so good to be with you! Good To Be With You Paul thank you I'm struggling I'm struggling to say good afternoon because it's good morning here In In Sydney So if you wonder why the curtains are closed because there's a lot of sunlight coming through the window, it's a good international call. Um, yeah, and and so you know.

Paul I Don't know if there was anything you wanted to to start with before we bring up the the Ydrs group, Well, I mean I think just to Echo um, Chair gender's comments: The direct registration system has been a feature of the marketplace for over 20 years. It's a well and truly trusted part of the market. I Think what we've found. Quite surprising and actually quite exciting, but quite surprising over the last 18 months.

In particular, is so many investors in the marketplace don't know about it. so we need to do a better job of actually educating the investing public and the prospective investing public about what their choices are when they buy and sell. Securities in the National Market when they do that, they can ask their broker to directly register their shares with the company which takes place through the company's transfer agent and that allows the investor to have their name directly recorded on the register of stockholders and that gives them Absolute legal title and a perfect direct relationship with the issuer. So some shareholders prefer that.

others prefer to hold their Securities with banks or broker because they're very active in the marketplace. So it look it, it's a feature of the system. It's a very good feature of the system. It's possible that we might all want to make some minor enhancement to it, but fundamentally it is available.

It's available for all U.S public companies and I think we all just need to work a bit harder to to get the message out about what the choices are that are available to investors. I think I guess that's one I would say By the way, I have some opening comments. yeah and Paul I think you're right that the option is there. It depends on the investing public what they want, uh, holding it in direct or holding it in what's called street name and uh, there's some pluses and minuses on each side with the SEC are neutral to that.

but I'm curious Paul if and maybe it's a follow-up but just if there are things that you see from running a transfer agent business, uh, what helps facilitate for those investors who do want to do direct registration? how to best facilitate that? We, of course are have had it on the Uh rules for over two decades, but if there was something that you know from running this transfer agent business to follow up, let us know. Okay, and they're happy to just give a quick bit of feedback on that. I would say that um, almost all listed companies sort of talking about Equity issuers now provide for direct registration, so if if an investor wants to hold their Securities directly, that choice is available to them. um, Chairman: I I Agree with you as a company that this is really a choice for investors about whether they hold their shares in street name or direct registered name.

We don't. Really, we're not trying to interfere, it's an investor. Choice Ultimately, this needs to be driven by education, information, and the investors exercising their choice as to how they do this. um, in terms of how to go about it.

After you know acquiring shares in a security, the investor needs to speak to their broker and ask them to affect a direct registration transfer which would move the shares from the broker's account at the DTC into the Investor's name directly at the transfer agent. The investor doesn't actually have to do anything that can all be done between the broker and DTC and in this case Computer Share as agent for issuer, it's an electronic process. It can happen very quickly and within 24 hours of receiving a transfer from the DTC we will confirm the registration to the investor and so it's a very simple process. We just need to increase the awareness of what the choices are available to investors and I'm sure Brokers will be quite happy to um do what their their client prefers.

It'll either be to leave them in a brokerage, accounting street name or perfect a direct registration. I Think what we'll do now we've got um, the team from Ydrs.org so we're gonna. we're gonna bring them up and uh, welcome to Miller Bivic and Chives Thanks for joining us, thanks for having us yeah um and each of them has a question uh around DRS These are the guys who along with their team helped to prepare that extensive information packet on DRS okay, hello, Dave and chair Gensler I'm Miller Uh for the last couple years I've been heavily participating in social media investing communities um had extensive investment experience. but when I learned about the Open Secret of the direct registration system I caught fire.

It opened my eyes to the fact that most investors don't actually own the stocks and their name that they think they own. I Then began to spend many hours every day for months one-on-one helping hundreds of individuals learn the why and the how to direct register stock. This inspired me with help from a German investor to create Drsgme.org with our goal of educating the masses in less than a year. Since then, we've grown into a team of roughly 20 DRS volunteer advocates and we just launched a second website Ydrs.org where we plan to have instructions on how to directly register every U.S security.

Following up on what Paul just mentioned, we believe that investors if provided this information that we have learned they will likely choose direct registration due to many of the benefits that we're hoping to touch on here today. and that's exactly why we're here. education. So on to my question.

It's about retirement accounts. Pensions and retirement plans are often exposed to more risk than what we're told. Not to mention shares in 401ks can be used for locates and lending. Needless to say, risk, exposure and dilution can hurt the Securities value.

On the other hand, transfer agents are not able to lend or sell shares short, but is very difficult to move self-directed IRAs to the DRS and impossible for all other retirement accounts those that are not self-directed So my question is, do you think it's a benefit for individual investors to have the choice of having retirement accounts in the DRS And do you think this way of holding should be made more accessible for investors that aren't familiar with the DRS? Um, Miller I'd Have to learn a little bit more in terms of the limitations in the 401K plans which might also relate to other Departments of the government like the Department of Labor but uh, as as I understand it, uh, it's an Investor's choice. Most investors just have their shares in street name. That's how brokerage accounts are often set up. It facilitates uh, that trading uh, and moving in and out of a stock particularly if somebody is more active.

Uh, of course, many years ago, we at the SEC helped facilitate that there is such a thing as direct registration and doing that electronically and that's an Investor's Choice Um, but again, on the 401K plans. if there's some technical issue I'd like to learn and that could be part of some follow-up as well. So you don't know any specific reason why retirement accounts wouldn't be allowed to directly register securities. I Think that the non-401ks that many pension plans find at this facilitates their Um applying and selling securities to be in street name and that they've they've made a choice that that's uh, that uh is a is a a positive way to approach it.

but if there's a technical issue on 401ks, uh, it'd be helpful to learn from you. Dave But maybe Dave if I could just add to that. And and just to clarify because I agree with what Chairman Gensler has said. um Computer Share as a transfer agent is not separately a 401k provider, so we cannot be the IRA administrator of the account on the books of the company.

We obviously can register security. So I Think what we've said in the past is it's possible for the 401K provider to bring an account for the investor directly onto the books, but we can't step into the shoes of the 401K provider certainly as things stand below. So you know, maybe this is an area where we do need some discussion about how to ensure that everyone's needs can be met. but I think we.

You know we're aware that there's some concern about whether or not those can be held on the register. Of course, people can take their shares out of their 401k and hold them directly in their own name, but that undoes some some benefits as we understand of actually holding through the 401K So there's there's clearly a few technical, um, challenges there we'd probably need to unpack in a separate Forum Okay, right and not not only the 401ks, but IRAs that are not self-directed IRAs It also cannot be directly registered, which is the vast majority of retirement Holdings in my experience, really. And Paul does your experience that that what Miller's race is for the same reasons over at the yes, major retirement accounts I I Think we, as a transfer agent um, would be able to administer these accounts if we didn't also have to assume the obligations of being reporting in an IRA sense. So there's some conflict between duties here, and if the third party Ira provider were to come onto the register and could perform those other duties I think would be fine.

A few people have said to us, well, Computer Share why don't you also become an IRA provider and that will sort this problem out. You know that that's kind of a business case issue that we need to think about in the background I'm not sure that's the solution to the problem, even though it might solve it if we were to also adopt that role, but it is an area we need to focus on I think as an industry just to um, jump in and kind of speak on the solution. We've actually, uh, found that there are only two custodians in the US that are willing to direct uh, direct register, self-directed IRAs So the option is out there and it's possible, but it's just very, very limited access. so like we can't have the majority of the retirement accounts going through two custodians.

Uh, but for some reason it's very difficult to kind of bring other custodians on board to this idea to be able to direct register uh, their customers assets. Um, so I think this is something that we can we can follow up on I We do need to move on to the to the next question guys. Sure, Well, that would be me. uh I'm bibik uh, as you can probably tell from my accent I I'm not from the Us Um, about five to ten years ago I used to edit videos for HSBC and PWC and that was my first glimpse into the belly of the Beast Uh, I'm now a big advocate for the DRS I've worked on instructions for how to move shares into the direct registration system uh, for the Drsgme.org and why Drsdydrs.org efforts.

We are currently uh at over 140 guides for different Brokers worldwide and they are supported in seven languages with more on the way. Uh, my question is about voting rights and direct registration. Uh, the vast majority of shares. Um, as you said Benzler, they are held in street name and as uh in 2018, the former SCT commissioner Rob Jackson stated the following about beneficially age says today fewer than one in three investors have their vote counted directly to registered shares.

On the other hand, have no issues with votes being skewed or discarded personally. As a non-us investor, it has been nearly impossible to vote my shares until I directly registered them chair. Gensler Would you agree that full voting rights and prevention of overvoting is a benefit for both the investor and issuer when Shares are held in direct registration? If so, would you be willing to include this on the SEC page regarding the benefits of DRS with the DRS Well, I Think that shareholder democracy is one of the really important aspects of their public markets. Uh, and and a critical piece of our 90-year history.

So, shareholders ability, Individual shareholders ability to vote their shares is a critical feature um of our markets. Um I Believe even through street name, individual shareholders should be able to express and vote their shares. Have their broker dealer then properly make sure that those votes are counted even on the street name. So Vivek I'm not I'm I think it's regardless of whether it's DRS or street name Shareholder Democracy and individual votes need to be properly counted and moved through to the entire system so that the managements and the boards of directors get the clear votes from the people that they work for.

The the real owners of the company are the ultimate shareholders. Absolutely I mean Unfortunately at the moment that with the kind of excessive liquidity in the markets and and Ftds and short selling, a lot of street name investors are kind of. They go to vote and the broker tells them they have voted, but their vote isn't counted largely. they get discarded or actually voted by the short seller who who inherently has no interest in the company.

So it's it's a difficult one and and to us why Drs.org We believe direct registration is a way of accessing that direct connection to the issuer. I should have grabbed the statistics going into it, but there I do know that there was a comment letter filed um a couple years ago that talked about the number of voting issues and incidents and and it was in the hundreds. Um, the documented incidents of votes not being counted under votes over votes. Yes, my understanding is that Broadridge or you know, whoever is operating that capacity, uh, will simply truncate the number of votes if they get too many.

Um, you know they'll get more shares voted than what you would expect. So I think that that's part of the the issue that Bibik is trying to get at 100 sorry I'll let you go Paul Would you mind? Sorry, because I can probably add um something this part of the conversation because in addition, in addition to being you know, a transfer aging the marketplace, we obviously tabulate votes for issuers for their shareholder meetings and the tabulation is both of the directly registered shareholders and the votes that are lodged by Um agents of intermediaries. So Banks and Brokers and you obviously mentioned that the largest provider in the marketplace, um, what we do as a tabulator is ensure that only the number of votes that the bank or broker has an entitlement to on behalf of its customers can be voted and the industry and we have been part of this. the the Commission's been part of this.

We've been working on a vote confirmation Initiative for the last three years or so. The debate has gone back long prior to that. But but I can say as a tabulator we have for the last three years been confirming votes back to Banks and Brokers at the 99.9 level. So there are very very few votes that are actually rejected when lodged by Banks or Brokers with the issuer agent.

I Think the the issue that you're already focusing on is the instructions that come from customers of the Brokers and whether the broker is in fact able to um, pass on the aggregate number of votes that all of the clients are are instructing. And that's an issue which as an agent for the issuer, we don't have any visibility over that. All we can take is the boat that's come from the broker. So again, this is a an issue to do with transparency and and ultimately client reporting from the broker back to its client as to whether it's vote counted or not.

We are certainly confirming back to the bank or broker how their aggregate nominee vote has occurred. So the chains are being put in place and we need that reporting to go the whole length of the chain so that investors can have confidence when they're voting through the street system. Of course, when they're voting directly because they're holding, the security is directly on the register, That's a direct interaction between the investor and us as agent for the issue. And we don't have the complexities of intermediated parties and agents of intermediate parties in the system.

So I Just mentioned that I think the industry has made tremendous steps in the last couple of years to improve this process, but there's still a few steps to go. All right. Thanks Paul Yeah, and so real quick. We'll move on to Chives for the last question.

Yes, and thanks so much. Um, glad to be here and it's a perfect jumping off point. Uh, it seems like the Common Thread through a lot of the discussion so far is the obfuscation that exists and the opaqueness that exists when there's so many different parties operating, uh, parallel or along the same chain of custody inside of the market and direct registration is an opportunity for investors to enjoy, you know, self-custody keeping the shares in their own name. My question has to do with um, more transparency and helping make more individuals aware of a 2004 SEC rule.

So a previous SEC administration had passed role 17 Ad20 of the Exchange Act about 20 years ago, which codified that issuers could not require or force their shareholders to leave the DTC and the ruling that Administration expressed that Security's repositories were necessary to ensure prompt and accurate clearance and settlement of Securities transactions, and that rule has since been interpreted from what we've found very broadly by investors, by issuers, and by transfer agents all that use the market. For example, a knowledgeable staff member at the Stai uh, Securities Transfer Association told us that that role prohibits direct stock purchases from being advertised whatsoever. And to paraphrase Suzanne Trembeth's most recent book, The DTC will only broadly state that they cannot cannot on a request from issuers to exit the system because it has not been permitted by the SEC Now, two companies have recently started reporting the number of directly registered shares in their 10q and 10K Financial reports in the context of Ftds and Float dilution, leading to concerns about shareholder democracy and the continuing dematerialization moving towards book entry electronic securities Uh Chair: Gensler Would you encourage issuers to educate and to share information with their investors about the various benefits of book entry? DRS Holdings such as ensuring votes are received or ensuring the chairs are delivered? Uh, Chives, thank you for uh highlighting the the rule from 2004 which I think that you mentioned would still be on the books, but in terms of your overall question, again, this is an Investor's choice. So you and millions of other people have a choice whether to have your ownership expressed in street name or in this direct registered mechanism and what we do at the SEC and I'm glad Paul mentioned some of this earlier as well is to ensure that we have roles that your votes are counted and that people are held accountable, that those votes go through the whole system.

Um, you're correct that there are layers in this system and that there's layers. Um, uh, create, um, uh. Some lack of transparency is what you've highlighted, but we still hold people accountable to make sure that those votes are counted and they go through the system. From an issuer point of view, I think an issuer is makes disclosure that uh, their investors find material and uh, and and uh, engaging with issuers as you have, uh, may change what they think that investors find material I I Would say frankly, to date, most issuers have not found at material that investors would want that information about how many shares are in street name versus in uh, direct registered.

But do you think the SEC rule as it's crafted, prohibits issuers from even you know, educating their investors about it? Uh Dave I I Think you're raising a good point but I don't In you know, in this format, you said why I might not speak to specific companies I mean issuers? Their two issuers are disclosing this already. So I think that probably self-answers your question. Um, okay, that's a that's a fair point. Yep, okay.

can I can I just can I just add very briefly to that I think there's uh, not within this forum here, but in the marketplace there's kind of a conflation of of issues and the issue to do with. Can an issuer guide or instruct its investors to withdraw their shares wholesale from the DTC I think is the issue that Chives was really first referring to and I think there is good reason why that principle is there because if you're going to be a public company listed on a public market, the public markets need access to an efficient clearing and settlement system. So there's some tension between continued listing and that particular rule. This is just my my personal opinion, but the other side of the discussion which is should issuers be able to inform their investors that DRS as a system exists and investors can exercise their Democratic choice to use that system I I mean I Think personally, issuers should be free to do that I Don't believe those two issues are the same thing, but they're being conflated in the marketplace from from my read of some of the the commentaries.

So I think there there ought to be a way where everyone's interest can be dealt with the specific issue of whether specific companies report the actual number of shareholders holding. DRS I think is exactly as chair. Gensler Just said it's a materiality issue and I think this may become a trend in future we will see. but I think the macro points are different and can be worked through.

Okay I'm gonna I'm gonna thank all of you for for jumping on and talking about DRS I Know it's something that the community really cares about. It's something we've heard a lot about for a long time now. Um, and you know I think this is just the opening part of that that conversation I would say this to Miller and Chives and uh and and all those that are part of This is it's helpful. It's I mean even preparing for this conversation and helping me understand some of the the thoughts that you have.

Uh, so keep engaging. It's helpful. All right. Thank you Thanks guys! thank you thank you I'm gonna uh, take one question now myself.

Um, and let's jump into the SEC rule proposals. Um, so I've got a question for three of them. So we'll start off with the Order Competition rule. So so my overall question to you about the order competition rule at a high level is is why why be so prescriptive with this rule in terms of the auction facility, the parameters, that type of thing, you know, we've we've talked about this before, but you know what? What is it that you think is needed here in terms of the the explicit Mandate of an auction and and in fact, the parameters for those auctions Um, and and I should say we very much support the need to move uh, trading from the off exchange, the non-competitive off exchange space to LIT markets That that is something I think we agree on and our entire Community believes very strongly in.

But uh, why be so prescriptive with auctions versus you know, a simple, a simpler rule that would just move trading on Exchange and then let exchanges compete and innovate for the you know the best way to to fill those orders. So if I could step back just for a moment Dave your question's a very good one. Just but stepping back, our current Equity Market structure um, hasn't been updated in about 17 years and so much has changed in that time. and uh, we have in that time, we've grown to a market where about a third to a half of the market on any given day goes to the dark Market rather than the lit market and an individual security.

Sometimes it's well in excess of that, but in particular, well over 90 percent of marketable retail orders where you haven't set a limit price for going to the dark market. And so what we laid out is a series of proposals. um, one of them that you mentioned about auctions, another about best execution I mean go figure, but the SEC actually didn't have a best execution role. We relied on the self-regulatory organization Finra for that.

we've changed. We've proposed some changes in disclosure we propose fourthly, some changes. Important changes about harmonizing the rules and the off exchange dark market and the on Exchange markets around minimum increments, not just quoting, but where you can trade. Yeah, which is very, very important.

Interestingly, I'm going to come to your question. Interestingly, the part of the four proposals that we've heard initially and the comment period still open until March 31st. but initially we're hearing a bunch from some of the biggest uh Market participants. They don't really, uh, see the path for these auctions.

So I want to address this not just to your listeners, but to the the uh off exchange market makers that might be saying we don't want these auctions, We've proposed them. We need your feedback. We need your input. But the reason we set did this was to instill greater competition when over 90 percent of your marketable orders are going off exchange to a handful of a small handful of wholesalers that are not necessarily competing order by order.

wouldn't it be good to get greater competition there? And so for a segment of the market trades less than two hundred thousand We said. you know those should really probably be exposed traits from natural persons and the like trades be exposed to Greater competition. particularly if they don't get you better than the middle of the market or better. And guess what, when the trades that they're giving you maybe a tenth of a penny or a hundredth of a penny price Improvement Like three quarters of those have mid-market prices available.

And so our economists looked at this and to say that's about a billion and a half dollars of further price Improvement that could be achieved. Why were we uh, in The Proposal You say? Why were we detailed? Why did we have so many details? Uh, we were trying to lay out something that could be a a fair auction mechanism, but give us feedback if if the time period should be shorter, we should hear that if the time period should be longer if it should be something different. But we're trying to make sure we can instill greater competition through this proposal and and look at it, might even, uh, tell you that we need to hear from people that say not only do we support the other rules, but we want greater competition through what's called regulation best execution or in this auction role as well. Oh, and and the The Proposal was very detailed for sure it was a long read.

It was excellent analysis. I thought I thought it was one of the best written. SEC World proposals that I've seen and I've heard from a lot of people in the industry um that that same kind of feedback I I think a lot of people who I I see on Twitter or Reddit they want you to close the dark pools um and the SEC has some Authority apparently to do that and and I think this is a good chance real quick. Just to clarify that you know that's not where retail trading is taking place.

Most most retail trading is taking place in these off exchange internalizer and wholesaler systems. and then in fact, this rule proposal would significantly change the way that that trading takes place and would push most of that trading onto lit markets. Yeah, I Think that there's there's three or four ways in In each of the rule proposals, there was a way. the auctions we just talked about in what was called regulation best execution meaning that when you give a trade to a broker, they actually look around the market and and consider the various available prices and to try to achieve best execution on your behalf.

given the time and the nature of the markets. We effectively said in a conflicted transaction where you might be getting a payment for order flow in a conflicted transaction, you had a heightened responsibility of best execution and separately in uh, a role around the minimum increments. Some people call it the tick size role, but the minimum increments We we sought and proposed that there would be uniformity, harmonize that the off exchange centers couldn't have an advantage and be trading its smaller increments than the quote increment. Now I Think we're going to see some commenters come in that say drop that best execution role or drop the auction roll.

Or don't harmonize between the dark markets and the lit markets on these fundamental uh rules of the road. Um, and to the extent do you agree with them? of course, tell us. but if you disagree with them, we need to hear that as well. Yeah, I Think a lot of firms who have enjoyed an advantage of regulatory advantage and stand to lose that might also stand to lose money because of that.

Let me try to also address and I see that uh, you have a somebody that just came on. But let me just quickly say say this. look the competition between the lit market and the dark Market also can benefit retail investors. Um, but it's if it's a level field, you get the best competition and and that's what we're trying to do is best execution means best execution that you level the field on these minimum increments and that if they're on these retail marketable orders, not willing or able to give you mid-market or better put it into some competition.

Yes, thank you. So I'm going to bring up Jay Brown Now uh Jay's got a question on the best execution rule. All right hey Chair again how you doing I mean I can call you Gary because you told me I can call you Gary the Last house Yeah, you can call me Gary everybody else does Yeah, we're gonna be a little informal. um my thing is the the first question I asked you on the last time we spoke was what was important to you because that was before I started to read the actual proposals after being about 900 pages in, my question to you now is is that I'm leaning more to trying to understand the Banning of payment for order flow because in these proposals I see certain things Stripped Away To make it less of an incentive for broker dealers, making less of an incentive for market makers or hedge funds to even participate in payment for order flow with brokers.

But if you look at 2004 when Citadel says hey, this should be banned, we should get rid of it. If you look at the UK saying this should be banned, this should we should get rid of it I think what? I got a lot of feedback from other retail investors is why not just go ahead and ban it because in my point of view, if we are trying to make the capital markets Fair it I shouldn't have to remove myself out from my broker and put it into my name in an entirely different transfer agent so that I feel secure that I'm getting best execution I'm not trading off exchange I'm not going through internalizers within that particular firm because to be honest with you, some of them that call themselves market makers I Just think I have to be speculators I'm just being honest. but to be to to strip away some of the incentive and some of them do inducements, it doesn't necessarily calm the spirits and know that this thing still exists because after all, we know who created it right? We know where it came from. So my question to you is why not just go ahead and take that step and say okay, I propose it gone because the market was bracing for that.

It was all over everywhere we talked about it and then we get the proposals and I believe that. It is. They do have great things in their sub. Penny Best execution.

These things are all needed. But I think with the engagement of retail investors because I remember we talked about it, it was a hundred thousand I I Really need to impress upon you that this is a worldwide thing like we have Apes We have retail investors in every corner of the world that look at this stuff and if you can't tell, you can look at when you have an SEC meeting, how many people are tuning in to listen at this point? Yeah, why not go ahead and take that step? Because I think that's where the disengagement comes, right? That that's where the disengagement and negative sediment comes from is that we are pointing out these things. These things have already been proven. What is it going to take to get it done and who to direct us to to get it done? Because right now I'm a stair stepper type of guy I believe one rung at a time I Can't jump team.

So that's why I'm here asking you these questions. All right? Do I call you? Jay Yeah, it's fine. All right. Um Jay look I think you raised a good question, but actually we tried to go in the proposals um directly at some of the conflicts and some of the lack of competitive uh level field.

I Actually think we went further. I don't know that you were saying this, but some have said we went less than as you said, maybe Banning Payment Order Flow I Think we were trying to go directly at Uh, each of the components that, uh, importantly that there would be. we'd harmonize across both the dark market and the lit Market uh, these minimum trading increments that we would ensure that if you put a marketable order in, you had to get uh some competition unless they could get you mid Market or better and then even in the best execution. I Would note it's just in the current system.

There are brokerage houses that use payment for order flow, but there are also brokerage houses that have pay no payment for order flow that are still sending their marketable retail orders to the wholesalers and so even I'm just gonna say even if there was no payment for order flow, the bulk of marketable retail orders are going to the dark markets and we're generally how can we better instill competition for those orders but that you know it's it's I've heard that of course argument made before, but of course the the firms that don't accept payment forward flow for Equity is still due for options and one could Wonder If you know, not taking it for equities is more marketing than anything else. Given that 70 of payment for order flow is in the options market right now, we know in 2004, Citadel said the practice of payment for order flow creates serious conflicts of interest and should be banned. We know. Singapore Last year, uh, banned payment for order flow.

saying that it introduces conflicts of interest is likely to cause harm to customers and is inconsistent with the duty of best execution banned in the UK banned in Canada Virtue was a long time advocate for Banning the practice and instituting a trade-out rule. Um, it seems like there's a lot out there to to support just an outright Banning of both payment and rebates as well as unnecessary off exchange. Trading Yeah, I'm sorry Jay, just go What? I Think that we did in the proposals was to go through to the underlying conflicts because there are inherent conflicts in payment for order flow. But there's also this lack of a Level Playing Field And so you're right that a number of the Brokers are not even paying for order flow, but still are routing without checking the market necessarily for best execution.

So we thought we we ought to do that. We ought to do this proposal on the auctions and otherwise again, we get the feedback and your feedback is is going to be very helpful in this. But yeah, I think I think Jay We got to move on to Alex. All right, real quick.

Um, just in the grand scheme of things I Think that is the core of the frustration with the SEC I mean I Mean it's just it's what I hear every day is that your own data shows that it harms you know like we pull all this information from all everywhere and it shows that this right here is a direct harm to retail investors. This particular thing now we can talk about. you know of exchange trading. We can talk about internal levels we can talk about.

It's so many different things that we're into now that we weren't before. but I I Do believe that having these conversations and bringing these things to the attention into the Forefront lets you have a clearer picture of where we are educationally with knowing how markets work and doing our best to do it. Because the thing about it is on one hand you have these conversations. on the other hand, you got the pitchforks and I'm sorry both are valid.

You know what I'm saying that that's where I'm at with it. So thank you for having me hey before you leave. if I can just say we need to hear if if you're if you have disappointments and thought we should go uh and do something different or further absolutely. but also recognize there's a there's going to be a lot of comments that we get saying we shouldn't even have done what we did.

We shouldn't even have done the auctions or the best execution or the harmonizing the minimum increments. So and and so please make sure that uh, you know, focus and let us know and let us know you know in in appropriate ways. if you think that the things that we have in there uh, help the markets uh and help the efficiency I Mean we even lowered the minimum the the maximum they could pay or charge for access to the lid exchanges. So we also did something on the lit exchanges trying to lower the cost there from three tenths of a penny to one tenth of a penny.

Um, but we need to hear back from uh, you and others. Um, but I appreciate what you're saying uh around payment for order flow. Yeah, we stay in contact with you and everything. and I appreciate your having this because you're going to hear from the people, right? So that's your.

you're our clients right? All right? Alex Yeah, it's it's true and and really picking up exactly where Jay left off and everyone else that's participated both today and in December and over the course of all of these meetings I Think a common theme and thread that you're sensing is that folks individual investors feel disenchanted and disenfranchised. They are undertaking their own research efforts, their own initiatives to try and re-empower themselves within a system that they feel has left them behind. I Want to raise a difficult topic? Arising from last summer, it was shortly after we met for the first time in May of 2020, the SEC released a series of videos in June of 2022 and those videos portrayed many retail investors in a less than favorable light. Today I got messages from many folks and I'll just read one from a wonderful woman who's engaged with us many times cats and branches and essentially she said I believe those videos the SEC released last year really pushed people away from feeling like the SEC might actually be there to try and make positive change for individual investors since in the videos they basically implied that retail investors are dumb for investing in certain meme stocks.

So folks took an issue: number one with the portrayal of retail investors individual investors themselves, and then number two with the categorization of certain Investments as meme stocks. I Want to give you an opportunity to comment on the reflections that potentially you formed from now having engaged with us for almost a full year and whether you think that those videos aptly portray the individual investors, but I think we've benefited from the engagement I know I have but I think our agency benefits from the engagement uh, broadly with the retail investing public, but more specifically with uh, the community that you're uh, talking about I think the research is also it's it's been very, uh, it's it's been helpful and it's encouraging that uh, we might not fully uh, Embrace every idea Uh, we just had this conversation about payment for order Flow versus the proposals that we made. but I can tell you that we have benefited and I think we've also been able to be encouraged in in proposing things and the five-member commission each of us considering those. in terms of the Investor Education uh, videos.

Uh, what our Office of Investor Education often does is tries to put things out and encourage a public discussion and a dialogue. uh uh and um, uh I Would say say the video that that you're referencing certainly has done that. Uh, but I I I Gotta tell you that I think that, um, whether it's in the Reddit Community whether whether it's in you know, other uh, forums and social media and so forth. When I when I have the chance and I unfortunately don't have a lot of time.

but when I do read: I learn from it. So I I find that there's whether it's an individual investor doing research or a group in a Reddit Channel or or other channels, it's it's very beneficial and I've learned from it. Um, he's not answering my question. No, it doesn't it? It does in part I I Just wanna it doesn't Echo Again, the settlement that you know.

the video in particular was talking about how individual investors need to do their research and that their research would drive them away from necessarily investing in whatever the basket of meme stocks was. And you know what I'm trying to emphasize here is that clearly the folks that you've engaged with over the past year are very well researched, very educated It in their Investments and that research hasn't LED them away from Passion and support of these particular companies. So that's all I'm trying to. Yeah.

and I I think that that research uh is is important and certainly I know that there's an awful lot of research in this community. Um, I mean we had this discussion earlier about Uh fails to deliver and and direct registration. There's a lot of research also about our rules and not just the companies. what's really important.

And and I think that I think we as a nation made the right choices in the 1930s. Roughly right choices around that investors get to decide what risk they want to take as long as they get full fare and truthful. And it's really important. Full fair and truthful disclosure.

and in the equity markets that we're talking about here that we ensure that you do that investors get that full, fair and truthful disclosure. We're having similar debates in another field in the crypto space where that's a more non-compliant field and that's a field that needs to kind of come into compliance so investors can make their own investment choices about benefiting from that full fair and truthful disclosure. In this Equity Market space, it's often about the structure of the market and is the structure fair so that the competition for what I would say the investing public that this guy's just rambling on everything. Investors Public: those are sweet orders.

There's actually an economic rationally economic benefit that uh, market makers should want to pay more from somebody selling 50 shares than somebody selling fifty thousand shares, right? You know? And so you know the investing retail public. The everyday investor should sort of get the benefit of competition and the best execution for the sweetness of those orders. But but do you think it was a mistake to to label a group? There we go. Dave Stocks: You know these are public issuers that you know was that was that the right thing to do right? Dave That happened before I was even in this job in April I Don't know where that term came from out of January of Uh 2021 when we issued a report I think we caught it.

The GameStop report. So um, uh uh, that's uh. I I don't I I think of them as individual companies and individual issuers. Okay, and that's how we think of them.

and we think of our as individual investors as well. right? Um, there's a there's often characterization of retail and it makes us sound like the product instead of actual. No, that's a good point. Alex And that's a term that probably predates it is and it's pervaded.

and I think it's something that as time goes on we should try and just shift what is the the dialogue and the focus of it. Um, but no, We've greatly appreciat