Summary
In recent years, transparency in financial markets has become a pressing concern for retail and institutional investors alike. While current systems allow for general tracking of trade volume, they lack the granularity necessary to identify repetitive trading behaviors or the impact of specific accounts on price movements. This proposal advocates for a comprehensive trade logging system that records each trade with buyer and seller brokerage ID numbers, thus enabling market participants to identify patterns and ensure fair practices across all market tiers.

Purpose
The primary objective of this petition is to introduce a regulatory requirement for all U.S. exchanges and major global markets to log every trade with two key identifiers:

• The buyer’s brokerage ID number
• The seller’s brokerage ID number

These identifiers would not disclose personal details but would allow tracking of account behavior, highlighting repetitive patterns that may signal insider trading, wash sales, or other manipulative tactics.

Details

• Implementation of Trade ID Logging
  Each executed trade should carry two anonymous identifiers: one for the buyer and one for the seller. These identifiers would remain consistent for the lifetime of each account, providing a mechanism for regulatory bodies, exchanges, and investors to track trading patterns and behaviors without violating privacy.
• Brokerage ID Transparency for Retail Investors
  To empower retail investors, logged data should be made publicly available, allowing individuals to examine if specific accounts consistently drive significant buying or selling pressure. This transparency would bring retail visibility in line with that already accessible to certain institutional entities.
  Periodic Reporting and Audit
• Exchanges should publish monthly reports summarizing trading activities and patterns observed in high-frequency trades and volume anomalies. Regulatory bodies like the SEC would conduct quarterly audits to ensure accurate and consistent data logging across brokerages.

Rationale

• Market Integrity
  A robust tracking system would discourage manipulative trading, including high-frequency trades designed to move stock prices or create artificial liquidity, as these activities would be easily identifiable by consistent patterns.
• Equal Access to Information
  Currently, sophisticated trading entities can track and interpret trading patterns more accurately than retail investors. Providing access to consistent ID-tagged data levels the playing field, allowing retail investors to make more informed decisions based on verified trading behaviors.
• Accountability
  With each trade linked to anonymous, persistent account identifiers, market participants and regulatory bodies can monitor and review trading activities to detect suspicious patterns, such as the same account consistently placing large buy or sell orders.

Benefits

• Enhanced Retail Investor Confidence
  Retail investors would gain access to a layer of data previously reserved for institutional traders, fostering trust in market practices and reducing the feeling of disadvantage.
• Reduced Manipulation
  Transparency reduces the appeal of manipulative trading. If buyers and sellers know their transactions are logged and patterns are trackable, they may be less inclined to engage in disruptive market behavior.
• Regulatory Efficacy
  This initiative would streamline oversight efforts by providing regulators with direct access to real-time trading data that includes the unique brokerage identifiers for buyers and sellers, making it easier to identify harmful trading patterns and enforce regulations.

Anticipated Challenges

• Privacy Concerns
  Brokerage ID tagging will use anonymized identifiers to avoid disclosing personal information. Additional security measures and encryption will be employed to protect account holders' identities.
• Technical Requirements
  Implementing this tracking system may require exchanges to upgrade their infrastructure. However, the long-term benefits for market transparency and security are expected to outweigh initial setup costs.

Conclusion
Incorporating buyer and seller brokerage IDs into trade logs is a feasible and necessary step to enhance transparency, accountability, and fairness within financial markets. By tracking the repetitive actions of individual accounts, this system will foster an equitable environment where retail and institutional investors can make well-informed decisions, promoting trust and integrity in the markets.

We urge financial exchanges, regulators, and legislators to adopt this proposal, ensuring that modern trading environments align with the transparency needs of today’s diverse and informed market participants.



Examples:
1. Increased Transparency in Short Selling
Example Impact: During the GameStop (GME) and AMC short squeezes, there were widespread accusations of naked shorting (shorting shares that weren’t available to borrow) and other opaque practices that could potentially manipulate stock prices.

How the Petition Could Help: With buyer and seller brokerage IDs logged on each transaction, it would be easier to track who is consistently shorting a stock, identify patterns in brokerage activity, and spot unusual or repetitive transactions. This transparency would help investors and regulators ensure that all shares shorted are properly borrowed, reducing the risk of illegal or hidden short-selling activities that could destabilize stock prices.

2. Identifying Market Manipulation and Coordinated Trading
Example Impact: In the GME and AMC rallies, large price swings were observed. Many retail investors believed hedge funds and other major institutions were coordinating trading strategies to drive prices down or create artificial volatility.

How the Petition Could Help: By tracking each trade's buyer and seller brokerage IDs, it would be possible to spot patterns of trading that suggest coordination or manipulation, especially if multiple trades are repeatedly executed between the same brokerages. This could discourage institutions from taking advantage of retail investors with sophisticated trading schemes, fostering a fairer market.

3. Enhanced Regulatory Oversight
Example Impact: In Carvana (CVNA) and other volatile stocks, regulators often struggle to identify manipulative practices in real-time due to a lack of granular data on who is executing trades.

How the Petition Could Help: Having access to logged buyer and seller brokerage IDs would empower regulatory bodies like the SEC to identify potential conflicts of interest, especially if brokers on both sides are part of the same institution. This real-time data could enable swifter responses to questionable trading patterns, improving market fairness.

4. Improved Confidence for Retail Investors
Example Impact: The meme stock rallies have led to a significant rise in skepticism among retail investors, who feel that they’re up against hidden forces within the market.

How the Petition Could Help: Knowing that each trade is transparently logged with both buyer and seller brokerage IDs would give retail investors more confidence that trades are genuine and not part of hidden agendas or manipulations. This added trust could improve market participation by retail investors, encouraging broader market engagement.

5. Greater Clarity on Institutional and Retail Influence
Example Impact: During the 2021 short squeeze events, it was unclear how much influence retail traders on platforms like Reddit had versus the impact of institutional trades.

How the Petition Could Help: By revealing buyer and seller brokerage IDs, the market would gain clarity on how much of the trading volume and price movement is driven by institutional versus retail entities. This data could offer insights into who truly holds influence over certain stocks, helping investors make better-informed decisions.

 

This kind of transparency could act as a deterrent for unethical practices, giving retail investors a level playing field and improving the overall trust in the market. By making each trade traceable to the executing brokerage, this approach could protect investors from the dark practices that contributed to extreme volatility and perceived manipulation in stocks like GME, AMC, and CVNA.