February 13, 2022
You are going to avoid FTDs and naked shorts by loaning more shares? That sounds like an incredible way to produce more FTDs in the long run and to encourage naked shorting.
If naked shorting is such a problem as the rule insinuates, then the goal should not be to throw bad actors a bone, but to eventually force shorts to close. This is a poorly thought out plan for a problem that a year ago nobody in a position of power even acknowledged. I believe, currently, there is more than ever in place to protect market makers, brokers, hedge funds, and other participants from naked shorting - it is simply being ignored for short term profit.
Long-term economic stability to the markets is being damaged by allowing more mechanisms to prop up FTDs, and SFTs will provide another avenue for that. For example, \"Preventing fire sales\" sounds like a great way to delay and cripple potential price discovery by minimizing margin and liquidity issues, but it is truly a method to juggle liquidity problems for another day.
The lack of transparency and sensibility involved in this ruling baffles me. This demonstrates that the American markets are rigged to allow for gross manipulation that masquerades as creating better ways to move shares in an obscure and unfair manner. If this rule is the SEC's best effort to eliminate or even minimize undesired outcomes in the markets such as FTDs, then truly, you must have millions of monkeys on typewriters proposing these rulings.
At some point or another the music needs to stop. Passing SFTs around to avoid FTDs and being caught naked shorting is an affront to proper price discovery and what fair and efficient markets encapsulate.