April 9, 2021
I am a U.S. citizen and a long time investor in the U.S. stock market.
I believe that SR-NSCC-2021-801 is an important and correct change. Risky speculation in U.S. securities has already caused several market crashes in recent history. These crashes disproportionately harmed honest investors and taxpayers who had nothing to do with the risky activity in question. Further, this risky activity was enabled in the first place by lack of rigor and caution at the institutional level, enabling irresponsible speculation using rehypothecated assets.
Recent developments suggest that once again, some large institutions may be again speculating too greedily on margin, and endangering themselves and their customers. The NSCC has a duty and a right to ensure that Members are acting responsibly with borrowed funds. More importantly, any Members currently engaged in irresponsible and risky activity cannot be allowed to endanger the stability of the NSCC's operations or the financial health of other honest Members.
The Special Liquidity Call mechanism is an appropriate and reasonable way to limit the risk and additional liquidity requirements to the Member(s) that are introducing disproportionate risk to the system. This change will help to avoid \"socializing the costs\" of failed speculation. Re-evaluating SLD requirements on a daily basis is also a pragmatic change given the current environment.
These proposed rule changes are reasonable and uncontroversial, and should not require any further notice or review period than has already been provided, as the changes would only damage Members if said Members are already acting inappropriately.
I thank the NSCC for working to guarantee stability for market participants in these uncertain times.
Regards,
Daniel Ford