December 16, 2021
Hello SEC, thank you for your time.
Increased transparency on security based swaps is a critical necessity in order to ensure a fair and free market. As you know, credit derivatives, such as swaps, can have extreme influence on the price action of an underlying security.
The lack of accurate reporting puts retail investors like myself at a fundamental and critical disadvantage compared to what could be considered a 'fair' market.
How would a retail trader be able to discern legitimate price action caused by trading in the underlying from that created artificially via swaps if we can't even know whether swaps exist on any given security?
In addition, without being able to view the magnitude of these Swap positions, how can we know the potential impacts they may have on the supply and demand of the underlying?
It is impossible to have fair markets when key information is withheld from the public eye.
Finally, the opacity of these derivatives allows for an illegitimate and dangerous amount of leverage to be applied to positions that otherwise would not be allowed or even possible with the outstanding count of underlying. This can lead to idiosyncratic risk scenarios, as we are all aware.
We are seeing the extremes of these derivatives play out before our eyes in certain securities, and it should be clear to all parties that without clear and transparent market structure, retail investors will never be able to invest in US based securities with confidence again. There is no free market without transparency.
Thank you again for your time, and I look forward to seeing this resolved.