December 16, 2021
Greetings,
I am a retail investor in New Zealand who holds shares in numerous US companies listed on the NYSE. It was recently brought to my attention that I have the opportunity to have my opinion heard by the SEC surrounding the reporting of securities loans.
I am deeply concerned by how the US market handles the execution of short selling and securities lending. This concept is frowned upon in many countries as there is sufficient data and analysis to show that this practice is harmful for both the free market and retail investors. Many companies have fallen victim of having their stock shorted in a predatory manner. Retail investors need to be informed if and when their shares are being lent out to facilitate the practice of short selling.
It is vital for it to become mandatory to disclose to the public, the different parties that are both borrowing and lending the shares. As a retail investor, I believe I have the right to know when my share has left my broker, and if it's being used to short a company I have a stake in.
I would also like to mention that if a broker were to benefit financially from the lending of retail owned shares, that profits from the lending of that share are fairly distributed to said retail investor.
Finally, I firmly believe that the loaning of shares needs to have a due date. It's important to ensure brokers are not lending shares indefinitely as it could be an issue if many investors were to sell in a short timeframe. Brokers need to have loaned out shares returned to them within an appropriate time to mitigate synthetic (naked) short selling, As it would require short positions to be closed in a timely manner.
Kind regards,
A concerned retail investor