Oct. 30, 2022
October 30, 2022 Derivatives have played a large role in multiple stock market crashes. Swaps are inherently risky because the lack of transparency. As a retail investor I believe that it is vital the SEC requires proper reporting of swaps. The lack of transparency is a breeding ground for fraud and collusion amongst hedge funds, market makers and prime brokers. There are market makers such as Citadel that also have an adjacent hedge fund associated. Swaps have been proven to be used to hide large over leveraged positions such as in the Archegos case. The hidden overleveraging causes a direct conflict of insterest between hedge funds and the prime brokers who back them. The prime broker backing Archegos is currently working to restructure because of their poor performance and I believe that a large portion of their risk was inherited from the Archegos incident. If swaps were required to be reported then incidents of idiosyncratic risks could be reduced protecting the large prime brokers and thus the tax paying individuals such as myself who will ultimately required to bail these banks out. Thank you for your time.