Oct. 31, 2022
October 31, 2022 Security based swaps should be subject to prompt and public disclosures by any and all involved parties. Swaps of this nature are problematic for many reasons. Such financial instruments allow financial institutions to influence prices of underlying securities without themselves needing to buy or sell said security. They can create large amounts of risk concentrated on a single counterparty or even within the broader market, should said swaps cause cascading liquidations. Furthermore, allowing public access to these swaps will reduce any room for fraud, as crowd-sourced regulation --while far from ideal-- can be more effective than the current mechanisms for regulating the market. Allowing massive positions to be built in a security based swap without publicly acknowledging said swaps is a problem because it can allow information and misinformation to be spread by bad actors to influence the direction of the underlying securities' prices, which can amount to fraud. By enforcing prom pt and public publishing of said swaps, large institutions will be forced to engage in the markets in a more fair manner than they currently do. Furthermore, making this information public will make it far easier to detect and understand a fund's biases when they share information regarding the underlying security. Not publicly sharing this information leaves far too much room for wrongdoers to manipulate these markets for their own gain.