Aug. 20, 2023
To the U.S. Securities and Exchange Commission, I am writing to unequivocally express my support for the proposed rule S7-32-10. Recently, I reviewed the correspondence submitted to the Commission by the MFA on 8/9/23. While I understand the MFA's stance and its mandate to advocate for its members, the repeated argument for liquidity—using the banner of public protection—raises concerns. The constant deferral of transparency in the face of rehypothecation and potential fraudulent activity is an issue that I believe must be urgently addressed. It's worth noting that the conversation around this rule has spanned over 13 years. In that time, swap data's obscurity has persisted, not just by the SEC but also by the CFTC, FINRA, Congress, and other entities. Historical events, some of which appeared preventable, like the situations on 1/28/21 with clearing houses and the 2008 MBS collapse, highlight the dire need for transparency and accountability. According to SIB published data, the notional value of derivatives, of which swaps share, is 600 trillion dollars and the market value is approximately 15 trillion. Moreover, these values do not include exchange-traded derivatives. The markets that trade and obligate such amounts of money are so obscure that the SEC, CFTC, and FINRA have no meaningful estimate of even their threat to national security in the event of a financial crisis and cascading effects. Considering these circumstances, I beseech the SEC to expedite the finalization and implementation of this rule. Furthermore, I urge a thorough inquiry into those entities staunchly against transparency and the public's financial education. The existing asymmetry of information runs counter to the principles of a truly free and fair market—a market where all participants have equitable access to crucial data. It is critical to emphasize that genuine capital formation hinges on the participation of new investors who are confident in the market's transparency and regulatory support. The ongoing secretive trading practices and non-disclosure of critical trade information by large institutions is, in my opinion, antithetical to the spirit of a free market. If we advocate for a level playing field, transparency is non-negotiable. Finally, I'd like to address the concerns raised about public disclosure purportedly skewing fairness in the market. It seems paradoxical to argue for proprietary access to public data while resisting equitable transparency measures. The stock market should be a domain where all parties, regardless of size or influence, operate under consistent rules and visibility. In closing, while I recognize the complexities of derivatives and financial instruments, I firmly believe that their unchecked proliferation and lack of oversight has created significant systemic risk. The immediate adoption and enforcement of rule S7-32-10 would be a commendable step toward market integrity. I appreciate the Commission's consideration of my perspective and eagerly anticipate the swift enactment of this rule. Sincerely, Jordan Johnson