Oct. 08, 2022
October 8, 2022
Thank you for taking the time to read my, and others, comments on this proposed rule change.
Short selling is an often manipulated tool used by large institutional investors and market makers to occlude real price discovery and fair market practices. Specifically, this practice is made unfair through the delayed reporting of large short positions through the use of dark pools and other off-exchange non-public registers.
Allowing short selling to take place in the dark and information is provided long after a position has been entered into, individual investors are left unaware of massive leveraged positions against themselves. This lack of information presents a problem for investors of all scales, creating an unfair advantage for institutional investors equivalent to trading on insider information.
I support, and suggest you do as well, the intraday 15 minute reporting requirement. This is critical to aid in early identification of abusive naked shorting practices, reduces the ability of large market participants to abuse loopholes, and creates a more fair market system for all participants.
This new rule would also provide any victimised companies a greater ability to defend themselves against predatory short selling, as short selling in the dark harms true competition and price discovery. The enactment of this rule would also introduce the ability for the general public as well as public companies to serve as watchdogs for the SEC as an initial line of defense against abusive practices, by being able to more granularly monitor short selling for securities fraud for those securities they are invested in, helping and strengthening the SEC's ability to fulfil it's mandate and to help weed out market participants that are working against SEC rules, all at no additional cost to the SEC.
I am a strong supporter of transaction by transaction reporting. It is clear that aggregated reporting is not transparent and provides far too much rope where fraud can be hidden in aggregates. Why should one individual or entity have to suffer a worse execution whilst another individual or entity benefits from a better execution, just because it is more convenient for certain institutions to report their short selling practices in the aggregate? It is wholly unfair and contrary to the requirement of best execution and so it should be a mandated requirement for transaction by transaction reporting.
Recently, the Commission, in proposed rule 13f-2, explicitly noted its awareness of the myriad ways in which short selling can be used to abuse individual investors and working families. In proposed rule 13f-2, the Commission said it is ...mindful of concerns that certain short selling activity can be carried out pursuant to potentially abusive or manipulative schemes. For instance, market manipulators may seek to spread false information about an issuer whose stock they sold short in order to profit from a resulting decline in the stocks price. The Commission has previously noted various other forms of manipulation that can be advanced by short sellers to illegally manipulate stock prices, such as bear raids.
Please, let us take a real stance against market manipulation and work towards a more fair and sustainable market structure for all. We cannot continue to allow loophole exploitation and manipulative tactics of large scale market makers to wreak havoc on our financial system.
Please make transaction-by-transaction reporting, 15 minute reporting requirements, and public access to this data a priority for your office.
Kindly, and with my sincere regards,
- Cameron J