Mar. 24, 2023
Hello, I’m a household investor and I believe it is important to have a market that is fair for all investors. To that end here are some loopholes that could be abused and negatively impact markets. Risk-mitigating hedging activities: This exception would allow securitizers to engage in hedging activities to reduce their risk exposure related to the securitization, but it could be exploited to engage in conflicted practices. For example, a securitizer could engage in hedging activities that benefit their own interests at the expense of investors in the securitization. Bona fide market making: This exception would allow securitizers to make a market in the securities being securitized, which could be used to ensure liquidity and pricing stability in the market. However, it could also be used as a loophole to engage in conflicted practices. For example, a securitizer could artificially manipulate the market to benefit their own interests. Certain liquidity commitments: This exception would allow securitizers to make certain commitments to provide liquidity in the event of market disruptions or other contingencies. While this is intended to ensure the stability of the securitization market, it could also be used as a loophole to engage in conflicted practices. For example, a securitizer could use this exception to avoid losses at the expense of investors in the securitization. I also believe that the penalties need to much more severe for those that abuse market rules. History has shown us that having consequences is an effective method to modifying behaviour. Currently the consequences are nothing more than a slap on the wrist which just becomes the cost of doing business. A fair market requires rule breakers to be removed from the market in order to maintain the systems integrity. Thanks Sent from my iPhone