Jul. 26, 2023
Dear SEC, I strongly support this proposal and praise the effort in preventing evasion of the reporting rule. This proposal would support transparency and the public disclosure of data. Excessively large swaps are a threat to financial stability and markets. Look into Archegos Capital Management and other loopholes that could have/need to be prevented. The SEC should lower the threshold and provide the public with more data so that this type of fraud can be detected. It is important that the rule be structured without evasion loopholes (e.g. by multiple actors colluding to build a large position through separately acquiring smaller positions that evade reporting requirements). I also support applying this rule internationally so funds and firms cannot use borders to evade the rules of the market. I suggest looking at the entire swap portfolio to determine reporting requirements, not just parts: The Commission should follow the precedent in Rule 13h-1, which identifies “large traders” using the trader’s entire position in all National Market System securities. The overall picture of a trader’s appetite for excessive risk can only be formed by looking at their total swap position. Allowing large traders to take on excessive risk via swaps in many different individual securities while avoiding reporting requirements is against the spirit of the rule and goes against the Commission’s prior rulemaking. The Security-Based Swap Position includes all security-based swaps based on the same underlying security or reference entity, regardless of whether they are debt (including CDS) or equity-based, so that funds and firms cannot evade reporting requirements by using different types of complex financial instruments. I agree with the definition of security-based swaps and it must be appropriately wide to minimize evasion. I agree with daily reporting and praise the Commission’s public release of the data. It empowers citizens to protect themselves from excessive risk and the companies they own from hostile actors. The Commission should absolutely utilize its authority under Section 10B(d) of the Exchange Act to publicly release data. Fraud is widespread, and the resources of the SEC are limited. By allowing the public to see potentially dangerous swap activity, the SEC and the public will be better able to detect fraud and assess threats. A more level playing field is absolutely in the public interest, and the damage that can be done via swap activity (e.g. Archegos) necessitates that investors be equipped to defend themselves. The Swiss government's inquiry into Credit Suisse (and Archegos) being hidden for 50 years is a good example of the uphill battle household investors have and it highlights the need for more transparency in the market; it also begs the question: why the secrecy? Best Regards, Jack -- A Household Investor