March 31, 2023

Ms. Vanessa Countryman
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090

Re: Proposed Regulation Best Execution, Release No. 34-96496; File No. S7-32-22

To the Chair and Commissioners:

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to provide these comments to the SEC’s Proposed Regulation Best Execution (the “Proposal”) in the context of fixed income trading.2 SIFMA is filing a separate comment letter (the “SIFMA Omnibus Comment Letter”) generally on the Proposal. However, SIFMA consulted a working group of member firms active in fixed income securities and, as a result of those consultations, SIFMA believes it would be helpful to provide separate comments focusing on differences specific to those markets. Because fixed income securities are substantially different from NMS equities, SIFMA believes that fixed income requires a different type of best execution analysis and presents additional issues with respect to the Proposal.

SIFMA endorses the importance of a robust best execution process for broker-dealers’ handling of customer orders. To have a well-functioning capital market, it is important that investors understand that when they entrust broker-dealers with an order, those brokers will use reasonable diligence to seek the most favorable terms reasonably available for the investors under prevailing market conditions—a policy objective that is equally applicable for fixed income securities. SIFMA commends the Commission for recognizing this principle and for supporting strong, effective and reasonably tailored rules, such as the existing FINRA and MSRB best execution rules discussed below, to achieve this goal. We also echo the SIFMA Omnibus Comment Letter’s support of the principles relied on by the Commission in the Proposal—increasing market efficiency, promoting competition, reducing costs, mitigating potential conflicts of interest, and recognizing the differences among market participants.

1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).

2 See Exchange Act Release No. 96496 (Dec. 14, 2022) (the “Proposing Release”) (available at https://www.sec.gov/rules/proposed/2022/34-96496.pdf).