Mar. 15, 2023
March 15, 2023
No party should be exempt from avoiding conflicts of interest.
Justifying an exception because following the rule would \"expose the securitization
participant to the risk that...positions could decline in value\is disingenuous. Securities have risk. If certain participants are allowed to ignore conflicts of interest when they might otherwise be negatively impacted simply neutralizes the intention of Rule S7-01-23 by continuing to support a one-sided financial system.
Requiring this activity to \"be designed to reduce or significantly mitigate such risks\in order to qualify for the exception is also disingenuous and leaves a clear and easy loophole for participants to abuse. The design of a participant's hedging activity should be unimportant to an SEC rule regarding conflicts of interest the impact to markets is what is under the purview of this regulatory body. Whether or not an activity is designed to have a negative impact is irrelevant to its actual outcome and should by no means qualify a participant for a conflict-of-interest exception.
Continuing to allow bona-fide market makers to use \"liquidity\as an excuse to abuse markets is also counter to the original intent of this rule when it was initially proposed. \"Liquidity\in the context of market makers is effectively selling assets owned by someone else, without having made any contract for ownership of those assets prior to the sale.
I support the original proposal these March 15th, 2023 additions to that proposal are counter to its original purpose.