March 25, 2022
Firstly, I'd like to address a serious problem. For too long now the SEC has used a single term, \"investors\" as an all inclusive that includes both retail investors, pension plans, and institutional investment companies.
The result of this is to create confusion and obfuscate the intended beneficiaries of a regulation.
I strongly propose that the SEC use a greater specificity when discussing \"investors\" and clearly indicate what class of investors is involved.
Who benefits from the removal of credit ratings from securities reporting?
Is it retail investors who are somehow confused by this data point?
Or is it institutional investment conglomerates who create these security instruments who wish to hide yet another metric from the public?
The latter feels more true.
From a statistics point of view, why would the removal of a metric be beneficial? It would invalidate reporting due to changing the mathematical model.
If there is concern that the existing credit rating information might confuse some people, then simply amend the description that accompanies the information.
Let's increase clarity, not decrease access to information.
I guarantee that the credit ratings for securities will continue to exist. But if this measurement is removed from reporting, the only people with access to the information will be banks, hedge funds, family offices, and other institutions. That hardly seems like a fair and open market.