February 19, 2022
Rule 9j-1
I agree. A person must not be allowed to avoid liability if a connection is found with a fraudulent scheme that involves security-based swaps. It is worrying that this is not obvious.
Rule 15Fh-4(c)
An entity's compliance officers independence and objectivity is paramount to the stability and credibility of the organization in which they operate. Any action taken to coerce, mislead or interfere with a CCO (Chief Compliance Officer) carries with it an implication for a reservation of trust.
Rule 10B-1
It's 2022, why isn't there a requirement for automated public reporting of large positions and risk measurement when this level of abstraction in financial instruments is reached.
Computer scientists and Information Technology professionals are required to structure and establish a stable and performant system with redundancy and transparency of their underlying logic. Financial regulation should be no different.
Section 10B should expand on the ruling to level the field of information access and make it possible to quantify and report large risk in embedded-securities. Even more within a derivatives market.
Other observations:
'Opportunistic trading' as a behavior and strategy of a market participant should be defined, measured and regulated within the context of level of access to information and intent.
Mandatory data repositories of SBSDR (Security-Based Swap Dealers) when any rulemaking pursuant to section 13(m) must be structured in such a manner 'that does not disclose the business transactions and market positions of any person' would encourage anonymized reporting.
Participant behavior and strategies for bypassing required reporting on Schedule 10B: When only gross thresholds are required to be reported '... the participant could quickly convert the gross position to a directional position by offloading the more liquid side of the trade, thus quickly converting the net neutral to a large directional position'.
If market stability and performance are a concern, why is simply adopting position limits regulation not the first option.
Hedge Funds and Market Makers play a game measured in volumes and liquidity. It's not the same game that regular market participants are playing measured only in price fluctuation. The unreasonable amount of underlying exposure allowed to happen behind the rest of the market participants puts the entire system at risk. A chain is as strong as its weakest link.
The packaging of financial instruments behind layers of abstraction and the deliberate obfuscation of reporting and transparency requirements that these institutions are allowed to operate is a big contrast to the level of accessibility afforded to the public.
There are consequences when taking risks. There were risks in 2008, and there are risks now. The Dodd-Frank protection act proposed 'a new foundation' on it's outline the first point being: The consolidation of regulatory agencies elimination of the national thrift charter, and new oversight council to evaluate systemic risk.
Today, someone has their eye on systemic risk overall. Right?