SEC Weighs Sending Retail Stock Orders to Auctions for Execution

It sounds fine and I like the concept, conceptually, but I have these things to say:

(1) Stocks have tight spreads (during standard trading hours) and slight differences in price execution is not an issue for long-term investors.

(2) Competition has already been driving down trading costs, and it’s done a great job. Investors (that I know) are aware of price execution quality differences, but that’s more of an options thing. (Credit card transaction fees are, in general, a bigger deal.)

(3) For naive, new investors, it’s so much easier for them get their feet wet with zero commissions trades.

(4) Brokers do have to make money.

I think any implementation of this plan should be delayed until after the recession has seen the newer, negative earnings brokers either turn the corner or die. It might be appropriate for extended hours orders first, and only if the broker has zero client-side commissions on trades.