Mar. 07, 2023
March 7, 2023 This proposal appears to be a step in the right direction, but such a tiny step as to barely represent any progress at all. Clearly it must be implemented without delay, and then the SEC must finally begin the enormous task of making actual meaningful reforms to the functioning of US stock markets Of course, the comments of foxes, when considering whether to protect hens, must be completely discarded. re Citadel and their interesting partners, being the main beneficiaries of skimming a little every day from household investors. Should a police officer prioritise the bank robber's request to be allowed to continue robbing the bank, or act to protect citizens? SEC Commissioners and large market participants of course already know this, but it bears repeating on the public record, at least with the purpose of establishing a paper-trail for the very strange lack of regulation and enforcement from the SEC: the following must be actioned in order for the markets to retain any appearance of fairness and credibility:- - dark pools, off exchange trading, odd lot rules and internalisation must all be fully revoked. there is no excuse for any trade not affecting the quoted price or NBBO. any argument for hiding some trades from price impact are plainly arguments for market manipulation, which an uncomprimised and non-corrupt SEC would very rapidly counter. just a quick reminder that appears to be needed at the SEC (based on the lack of enforcement for large market makers and hedge funds that do this every day with apparent impunity): market manipulation is already illegal - just the enforcement part is curiously missing - the entire concept of infinite liquidity must be condemned. it is fundamentally opposed to the basic laws of any free market: supply and demand. there should never be a guarantee of a transaction being possible at your preferred price. if there is no liquidity when trying to buy shares then you must raise your bid until an owner of those shares is enticed to sell them. anything else is quite frankly market manipulation - failures to deliver must be banned completely. I cannot fail to deliver my payment for shares, therefore in a fair market nobody should be able to fail to deliver them either. failures to deliver are theft, pure and simple - again an apparently needed reminder for the SEC: naked shorting is actually already illegal. it is rather strange how lacking enforcement of those laws has been... - fines must be set at a high enough level to represent an actual disincentive. Therefore they must be set well over 100% of the profits from any illicit scheme, naked shorting or failures to deliver - reporting transparency must be improved significantly. the delayed, aggregated and poor quality information made available to household investors is appalling. if short selling must be allowed, then the reporting must be much faster, include the top positions for each security and name of specific institutions, and include complex financial instruments currently used to hide short positions at enormous systemic risk (e.g. married options and total return swaps) - in my view, short selling itself poses a significant risk to the US stock markets and must be banned. it creates a perverse incentive, to profit from potentially viable companies failing (resulting in severances and unemployment). often short positions are never closed, resulting in the taxable event never occuring, and taxes never being paid. short sellers are incentivised to use their owned corporate media sources (e.g. CNBC, or apparently the SEC, judging from their insulting videos disparaging a specific set of securities) to spread negative sentiment and disinformation about otherwise companies, in order to force the stock price down. not to mention spoofing, trading during halts, and other nefarious methods of ensuring stock prices on heavily shorted stocks decrease. \"detection of fraud\" is not a credible argument for short selling. regulators and statutory auditors are tasked with detecting fraud, and ideally they should be competent and successful in this task, and remain independent. biased market participants cannot be relied upon to detect fraud - if there is some reasonable argument for why short selling is of benefit to anyone other than those holding those short positions, and it must continue, then it is abundantly clear that it can only take place for shares that have been approved for lending by the actual purchaser (the customer, in case of a brokerage account, NOT the broker or DTCC participant) and specifically identified with a unique number. Endless rehypothecation and \"locates\" and reasonable confidence of locates and using tokenised securities that lie about their actual shares owned as locates...these things do appear rather fraudulent, no? And for any long investors, they swamp the pool of available shares and depress share prices with artificial liquidity. household investors must be the party to receive any interest earneed from lending shares, if they give specific approval for the lending. it is frankly insane that brokers should keep the interest earned from lending someone else's asset - margin calls and capital reserve requirements must be automatically enforced, without discretionary waivers. these are in place for a reason - to prevent systemic risks, for example a gigantic short position where any bankruptcy thesis has been clearly refuted, which has become too big to close. if they can be waived at a whim / because of collusion, then they are worthless and the credibility and fairness of the markets falls yet further - OBVIOUS conflicts of interest must be addressed. for example, being a market maker with unlimited ability to \"locate\" shortable shares, internalising orders and routing buys off exchange, and simultaneously the same beneficial owners operating a hedge fund that holds collossal \"too big to close\" short positions (or total return swaps and married options) that benefit from the above ways of artificially lowering share price The infinitesimally small improvements proposed here are not something that can be credibly opposed. But the proposals do not go nearly far enough. The credibility of the US stock markets is rapidly disappearing as household investors are defrauded out of their honestly earned savings every day by the various absurd advantages that are given to hedge funds and market makers, with the SEC totally failing at their mandate to protect household investors. Perhaps the US stock markets should be termed \"meme markets\" due to the obviously unfair playing field - after all, such derisive terminology has been supported and propagated by SEC themselves, and surely they would never do that in order to help hedge funds in a brazen short and distort / market manipulation campaign by staining the image of specific securities, so it must be acceptable. The terminology is clearly appropriate in this case, given that the above issues still remain. I trust that I will soon see reports and funny videos made by the SEC warning household investors not to lose their money on meme markets and meme exchanges, and to \"do their own research\" and only hold assets in direct registered form in their own name and safe from the clutches of the DTCC. Or perhaps household investors cannot trust meme regulators? I AM SIMPLY ASKING TO NOT BE ROBBED IN BROAD DAYLIGHT. PLEASE TAKE SOME MEANINGFUL ACTION. (I ask without much hope that you will given your record to date, but more with the aim of establishing a paper trail of your suspicious non-action, which may be useful once the fraudulence of the US stock markets becomes too large to hide from the wider public.) Please do not delete this comment, or allow it to be deleted or lost. It is another very basic request, but the SEC seems to struggle with this (for household investors' comments).