The vast majority of trans female athletes competing against cis female athletes lose their competitions. Allowing all females to compete means letting the best woman win.
Requiring athletes to compete as their birth sex means truly unfair competition, as trans males (whose bodies become more like cis males than like cis females as they undergo medical transitioning, just as trans females’ bodies become more like cis females than like cis males) will absolutely dominate girls’ divisions if required to compete in them.