Aug. 11, 2023
Dear Securities and Exchange Commission, I applaud the SEC for proposing this rule that would enhance transparency in the markets. I believe that transparency is essential for fair and efficient markets. Large swap positions pose a threat to the financial system, as evidenced by the Archegos debacle. I urge the SEC to adopt more rules like this to promote transparency and prevent fraud in our markets. I also have some recommendations to strengthen the rule, as follows. (1) The threshold should be reduced to $100 million / $200 million gross to capture more potential fraudsters. (2) This rule should apply globally so that firms cannot avoid the rules by operating across borders. (3) The Commission should follow its previous rulemaking in Rule 13h-1, which identifies large traders based on their entire position in all NMS securities. The full picture of a trader’s risk appetite can only be obtained by looking at their total swap position. Allowing large traders to take on excessive risk through swaps in various individual securities while evading reporting requirements is contrary to the purpose of the rule, and inconsistent with the Commission’s prior rulemaking. (4) Security-Based Swap Position should include 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 circumvent reporting requirements by using different kinds of complex financial instruments. I concur with the definition of security-based swaps and that it must be sufficiently broad to prevent evasion. I agree with daily reporting and I commend the Commission’s public disclosure of the data. Lastly, I request that the SEC finalize this rule as soon as possible. Thank you and Kind Regards