April 23, 2022
Ms. Vanessa A. Countryman,
Thank you for the opportunity to provide my thoughts on this proposal to require public disclosure of securities lending transactions within 15 minutes of their occurrence.
The use of payment for order flow, complex algorithms, high frequency trading, and other technological advances used in today's markets by fund managers are clearly capable of being leveraged to aggressively short a stock and thereby compromise the overall fairness of the market as we saw recently in January 2021 with Gamestop, a company sold short at 140% of the float, Volkswagen in 2008, Tesla, and many others.
This is why it is of utmost importance to continually update and modernize securities lending disclosures to level out the playing field on both sides of the trade.
I believe it is in every investor's best interest to have fund managers complete a 13F form with short positions on a T+0 settlement and the source of their loaned shares.
This would not only reduce the risk of having abusive short selling behavior, but also make the market more efficient and avoid conflicts of interest between brokers and their clients.
I understand that stock lending is essential to the functioning of a market. Therefore, 13F statements should be updated to include short positions, as well as any synthetic or derivative position that would give an investor long or short exposure to an underlying security.
This rule could not only improve market efficiency, but also encourage fundamental research, make investments and companies safer from out of the ordinary activities such as abusive short selling, naked short selling and other predatory actions by fund managers.
Respectfully, a concerned retail investor.