Oct. 10, 2022
October 10, 2022 I support greater transparency through the publication of short sale related data to market participants. Alas, FULL TRANSPARENCY in short activity and short positions would enable investors and market participants to properly effectuate market price discovery. Current market regulations allow short positions and short activity to occur that artificially increase the number of shares in circulation. This information affecting the supply of shares is not available to regulators, investors, or other market participants which facilitates stock price manipulation. Furthermore, a key condition for the efficient market hypothesis is the perfect, complete, costless, and instant transmission of information where prices in an efficient market fully reflect all information available to market participants. A fully transparent market disseminating information to investors and other market participants reduces the likelihood of key participants losing track of the market which should increase m arket efficiency, promote stronger risk management practices, and thereby reduce systemic risk The new \"buy to cover\" order marking requirement is helpful to \"facilitate the collection of more comprehensive data on the lifecycle of short sales\" pg 54 for the Commission. However, a known problem revealed by the 2012 Rolling Stone article Accidentally Released and Incredibly Embarrassing Documents Show How Goldman et al Engaged in Naked Short Selling' is that some market participants (including Goldman Sachs and Bank of America/Merrill Lynch) manipulated supply and demand by intentionally creating fails-to-deliver on a targeted list of stocks including, for example, Overstock stock. These market manipulators used fraudulent trades to extend fails-to-deliver including matching trades to \"sell into\" required buy-ins. While marking a trade as \"buying to cover\" may reveal information beneficial to the Commission, this marking does not address the underlying issues where market m anipulators have been and are skirting requirements to buy in to close short sales that failed to deliver. Simply put, there is no situation outside of Wall St where a fail to deliver would ever be tolerated. If a fully paid for security fails to deliver, there must be a hard requirement to buy-in and close that transaction. This is clearly within the regulatory power and scope of the SEC, who in the midst of the 2008 crisis issued new (interim) rules against abusive naked short selling primarily to protect troubled financial institutions. See 2008-204 SEC Issues New Rules to Protect Investors Against Naked Short Selling Abuses (Sept 17, 2008). Similar rules should be the norm.